Only trading options instead of stocks?
- Thread starter 1a2b3cppp
- Start date
I do that with my 401k. For example instead of blowing $67k buying 2000 shares of dba, i will buy 20x ditm 2012 leap 29C for $12k and using the leftover cash to diversify my portfolio. The tradeoff is you are still paying premium (just less than atm), delta is close but not 1( around 80% ) and there is a much larger slippage opening/closing those positions. In return you get leverage, or in my case - using less capital to establish the same position.
Now if instead buying $12k of those option, i bought $67k of it. Then you are significantly increasing your exposure/risk vs buying $67k of the underlying. I think that's common sense, but a lot of people starting on option dont think this way. They figure i am buying $67k of stock, now i will just buy $67k of options...
Quote from spindr0:
You're being nitpick humped over technical details. An ATM call's delta is higher than a put's delta and the greater the interest rate, the IV and the time remaining, the greater the call's delta.
So even if close to expiration with low IV and low carry rate, the call's delta will be fractionally higher than the put. So technically, what you have is someone who wants to prove to you that .501 can never be 1/2
YOU MUST PROVE IT WITH A REAL EXAMPLE!! SHOW ME A REAL EXAMPLE WHERE PUT IS 0.501 VS CALL 0.5 !!!
Why do people always come here to ask dumb questions.
Are you guys all newbies and need to read a book or get some training?
At least 80% of the market participants don't know what they are doing, hence 80% of market participants lose money.
The fact you even ask shows you shouldn't be trading options or stocks.
Are you guys all newbies and need to read a book or get some training?
At least 80% of the market participants don't know what they are doing, hence 80% of market participants lose money.
The fact you even ask shows you shouldn't be trading options or stocks.
Synthetic Stock using options is the best instrument in the world, use it please.
Always good to know we have newbie that supply new blood
Given that Nine_Ender suggested that "$1000-$2000 can give you the option to buy or sell $500,000-$1,000,000 worth of stock" and you indicated that's huge leverage, I suspect that a 1-2 G option position must be huge for you. A position that small also does not require inside information nor does it mean that one does not know what they're doing. I also suspect that you should quit while you're behind
Quote from spindr0:
Given that Nine_Ender suggested that "$1000-$2000 can give you the option to buy or sell $500,000-$1,000,000 worth of stock" and you indicated that's huge leverage, I suspect that a 1-2 G option position must be huge for you. A position that small also does not require inside information nor does it mean that one does not know what they're doing. I also suspect that you should quit while you're behind
For a purely directional play, that is definitely too much leverage but I guess for hope-and-pray traders it's not. I suspect that you don't have enough on your account to take the position in stock so you need to use options.
Also, you might want to search for the meaning of "spread" and you'll find it very unfavorable for options compared to stocks.
I trade only options and no stocks. But my option positions are NOT designed to replicate long stock positions.
I stopped owning stock a few years ago when I realized it's too risky.
You can't beat the defined risk of a properly-formed option position.
I stopped owning stock a few years ago when I realized it's too risky.
You can't beat the defined risk of a properly-formed option position.