Option trade idea on YHOO
- Thread starter hajimow
- Start date
Quote from cdcaveman:
I agree with you totally... and good for you.... I should probably pay attention to what you have to say about yahoo.
Thanks. When I am successful, I go and stand in front of a mirror and tell myself that "you don't know anything, maybe it was a pure luck, be careful, be careful, just assume that you have lost money and the next trade is your last shot."
I believe YHOO might pull back to 15.70 range again and I will not buy at this range ($16.11). When it pulls back, I will sell PUT 16 for August or Sept to get some time decay money. My options in my account usually have time decay value of $500 to $1000 per day. At current level I prefer to sell weekly or August naked Call 16.
Given that his strategy is to "over concentrate" his focus on one stock, I think it's reasonable to assume he is doing it on margin as well.
Just a matter of time before he feels the sting of a different kind of burn.
That statement is nothing more than a silly rationalization for being lazy, reckless, and stupid.
FIrst of all, not ALL stocks go down together. And the ones that do drop, go down various percentages, as they may have different BETA's and be in different sectors.
In addition, if your stock does go down, you will likely get a MUCH EARLIER call from your broker informing you, that you're in a margin call you didn't expect.
WHY?
Because brokerage firms often raise the margin requirements of accounts that are overly concentrated, during market downturns.
That margin cushion you think you have, can dissappear in the blink of an eye, if your broker thinks you are over concentrated.
You now have only a matter of hours to come up with additional cash, or they will close a percentage of your trades.
You talk about..... "making account management more difficult when the market melts."
Trying managing your account when you get an unexpected margin call. And if you are not around to answer the phone..... GULP!
just like in Cards or any other facet of life.. position size and money management is what enables to not only stay in the game but to survive.. although i have heard many very successful traders say.. that in order to really make it sometimes you have to lay it on the line. Anyone can figure out that being completely conservative isn't going to make you hundreds of millions of dollars
Quote from hajimow:
Unfortunately your guess is right.
just be honest.. whats the worst thing thats happen to you trading.. mine is i bought penny stocks when i was young.. lost 1000 bucks.. start trading options and immediately lost like 6 grand from what i found out to be "theta" haha .. i bought otm options on AApl.. i had no clue how much i was going to be losing on a daily basis or how my probabilities were changing as everyday went by of even breaking even
The biggest shock to me was when I started trading and I bought BRE-X Mineral stocks which was supposed to be the biggest gold stock and was supposed to be added to Dow Jones and then it seemed that they added gold powder to samples and then sent it to the lab and they had nothing. Shares tumbled from $40 to $18 and then $3 and then 5 cents and then delisted. Everything happened in 2 weeks. I bought them at $18. I have lost more then but my skin was thicker and I also realized that market is unfair and live with it.