Options Price Movements?

[cashclay]

What are the major things to look at when picking an option that would most likely move in sync with the price?
For ex: Deltas are a tremendous force because they will tell how much an option will per dollar. But to me this doesn't make any sense due to the fact that the delta, at the time of purchase, doesn't remain the same. I heard about the spread with is also very important. You dont want to spread to be so big. But other than these two is there anything else?

 

[cashclay]

because it seems like nothing stays the same after you purchase it. Every indicator changes from day to the next and there isnt a stable variable that says this is how much the price is gonna move when you purchase the option. So im wondering if there is something like that

 

[lindq]

because it seems like nothing stays the same after you purchase it. Every indicator changes from day to the next and there isnt a stable variable that says this is how much the price is gonna move when you purchase the option. So im wondering if there is something like that

By far the most important factor in trading options is being able to predict the movement of the underlying. All your study of the Greeks takes a backseat to that. IMHO, nobody should be touching options until and unless you are a profitable trader of the underlying.

Having said that, there is no doubt that Delta is very important in selecting the option. Yes, it will fluctuate with price. And just as you can't fully predict the movement of the underlying, you can't fully predict the movement of the Greeks during ups and down of the underlying during the life of the contract. But STARTING off with the Greeks in your favor, is making the right start.

 

[AlphaRocks]

What are the major things to look at when picking an option that would most likely move in sync with the price?
?

If you want to move in sync with the price of the underlying, look into using synthetics (selling a put and buying a call ATM) as a replacement for stock; however, make sure you understand the greeks and time decay before venturing into doing synthetics, because you don't want time decay to work against you. (Option pricing consists of 2 components: 1. time value, and 2. intrinsic value; the time-value is guaranteed to go to 0 at expiration (theta is the rate of decay), the intrinsic value is how far ITM the option strike is.)

 

[K-Pia]

An Option price is mainly (as said AlphaRocks) Time and Intrinsic value. The Intrinsic value depends on Monyness (OTM & ATM = 0; ITM = Delta - Underlying Price). While Time value depends on Theta (Time to Expiration) However, the more Theta then the more sensitive, the option price, to Vega (Implied Vol).

So the BIG III factors of an option price:
- Monyness
- Time to Expiration
- & Implied Volatility

Those factors will impact the value of the greeks as well as their curvature.
You can either be neutral, long, or short to those exposures. If you don't want to trade them ... Don't trade options.

 

[spacewiz]

Deltas are a tremendous force because they will tell how much an option will per dollar. But to me this doesn't make any sense due to the fact that the delta, at the time of purchase, doesn't remain the same.

Gamma helps you keep track of delta changes. Also, one of the most (if not THE most) important things about trading options is understanding volatility. Read up on implied volatility and historical (realized) volatility. Without a solid understanding of these - you will definitely lose money trading options, even if you pick the right market direction.