New to Option and need advice

[ironchef]

What would suggest to us retailers to play the game like the professional and the MM?

This:

There is no edge needed in trading simple calls and puts, you are just making directional bets. No need to conern yourself with market makers or professionals just like if you were buying a stock outright. There is no special math or models needed to buy calls and puts. Study the underlying, pick a direction, pick a time frame, understand the basic risk factors and go for it. You don't need a quant or Ph.d in finance to simply place a directional bet.

We retails don't have the fancy tools to trade non directional.

Just one more thing: A directional bet works well in the current bull market which is essentially straight up since 2009. I have no ability to predict when this bull will end and not sure what to do when the bear arrives.

My account took a terrible beating from Feb through May of this year, it is easy in hindsight to say change direction in a correction/bear but real life is not that simple.

 

[gkishot]

Single legs, call/put, long/short depending on the situation and my opinion.

But IMHO, you don't make money mechanically trade single leg options, buy or sell, call or put. Been there done that. The market is too efficient, no one, especially not the professionals or MMs will hand us retails free money willingly.

If you can't make money trading options, then you might not be able to make money trading stocks. Whatever you strategy is, there is no difference. And yes, you can make money with stocks with a long enough time horizon. But this is a common knowledge.

 

[ironchef]

If you can't make money trading options, then you might not be able to make money trading stocks. Whatever you strategy is, there is no difference. And yes, you can make money with stocks with a long enough time horizon. But this is a common knowledge.

I agree, if you can't make money trading options, then you might not be able to make money trading stocks.

Perhaps the reverse is also true: If you can make money trading stocks, you might be able to print money trading options.

 

[El OchoCinco]

I believe if you cannot make money trading stocks then you cannot make money trading directional options. Options afterall are derivatives whose value is derived from the underlying. You have to be right on the stock movement and magnitude for the option to make money. So if you know nothing on stock direction, picking calls and puts will still be a losing game....

 

[ironchef]

I believe if you cannot make money trading stocks then you cannot make money trading directional options. Options afterall are derivatives whose value is derived from the underlying. You have to be right on the stock movement and magnitude for the option to make money. So if you know nothing on stock direction, picking calls and puts will still be a losing game....

Agree with that too.

After reading a bunch of old threads on flies the last few days, I am beginning to appreciate why pros trade them instead of directional if you have the tools and understanding.

Regards,

 

[Mnewton]

For options the best piece of software is thinkorswim.
Has all the Greeks and other stuff.
You need a couple of strategies.
Start with trading NDX the spread is from 10 to 25
Select the vertical view in the option list it will give you the cost to put on the spread. (If will also give you costs for butterflies, condors etc)
Try an otm a week away at nominal cost day .80 cents.
See how it works out.
Another strategy is to day trade the options.
Better done on a weekly on Friday. At 930 try to pick an option just otm on a stock that will move quickly say NFLX, if the stock pops you can turn a 30 cent option into a $3 one. The trick is finding the right stock and option