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Question about options
- Thread starter lasner
- Start date
Lasner,
Your question is very general and difficult to answer directly. When buying options, you must have a full understanding of the varialbles that affect price. Time is but one of them.
If you would like some good information to get you started in options, visit:
Chicago Board Option Exchange: http://www.cboe.com/LearnCenter/default.aspx
I've also listed some books on my website at:
http://www.options-trading-resources.com/Options-Trading-Books.html
Regards,
Steve
http://www.options-trading-resources.com/EliteTrSig
Option trading information and tools the pros wish they had! A former Chicago Mercantile Exchange employee reviews stock option trading software, books, and web sites and online income opportunity.
Your question is very general and difficult to answer directly. When buying options, you must have a full understanding of the varialbles that affect price. Time is but one of them.
If you would like some good information to get you started in options, visit:
Chicago Board Option Exchange: http://www.cboe.com/LearnCenter/default.aspx
I've also listed some books on my website at:
http://www.options-trading-resources.com/Options-Trading-Books.html
Regards,
Steve
http://www.options-trading-resources.com/EliteTrSig
Option trading information and tools the pros wish they had! A former Chicago Mercantile Exchange employee reviews stock option trading software, books, and web sites and online income opportunity.
Quote from lasner:
Hey guys I'm trading with a small amount of money(couple hundred bucks) in options and needed some advice. Do you guys think it's better to buy options in months closer to expiration or months farther away.
Thanks
With only a couple hundred bucks you're not giving yourself very many choices. Most options worth trading, you are going to have to trade front month OTM. You won't be able to sell premium, and any debit spread you do will also have to be front month OTM.
IOW, you're buying lottery tickets for the most part. I would recommend paper trading with a larger virtual account to see if you can be successful with at least a few thousand. If you can't trade a few thousend then your couple hundred will get eaten up pretty quick via commissions. If you can trade a few thousand, then you might consider scraping a bit more money together so as to provide yourself with a few more choices.
I only trade with a couple hundred bucks. I'm trading in the silver market. I bought three $150 options in silver four months ago in july silver at 1700 call. I made 6 thousand bucks off of $450
I'm going to stick with silver because it's so volatile, but I was wondering with a couple hundred bucks the front months get eaten up so bad because of time I was thinking of sticking to the later months and get strike prices further away from the money. I think the front months are just lottery tickets. The later months carry less risk because they have more time.
I'm not interested in trading any more than a couple hundred, it's just too risky in that market to trade any more.
I'm going to stick with silver because it's so volatile, but I was wondering with a couple hundred bucks the front months get eaten up so bad because of time I was thinking of sticking to the later months and get strike prices further away from the money. I think the front months are just lottery tickets. The later months carry less risk because they have more time.
I'm not interested in trading any more than a couple hundred, it's just too risky in that market to trade any more.
Quote from lasner:
I only trade with a couple hundred bucks. I'm trading in the silver market. I bought three $150 options in silver four months ago in july silver at 1700 call. I made 6 thousand bucks off of $450
I'm going to stick with silver because it's so volatile, but I was wondering with a couple hundred bucks the front months get eaten up so bad because of time I was thinking of sticking to the later months and get strike prices further away from the money. I think the front months are just lottery tickets. The later months carry less risk because they have more time.
I'm not interested in trading any more than a couple hundred, it's just too risky in that market to trade any more.
Really, both the front month and back month OTMs are lottery tickets, that is what allowed you to make $6K from a few hundred bucks.
But if that is the style that you prefer, I would by back month and at least give yourself some time for a move in the underlying.
Which option to buy? - from L. McMillan's presentation
- <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1064421>
Quote from lasner:
Yeah that's what I was thinking. The front months out of the money contracts are just way too risky as soon as you enter your trade the market has to go in your direction right away if not forget about it.
In general, if you are selling options you go for shorter expiration, if you are buying you get more value for longer expiration.
In silver futures you don't have a time limit, is that right? You just have to be able to sweat it out if there is a move against you?
In silver futures you don't have a time limit, is that right? You just have to be able to sweat it out if there is a move against you?
Quote from Eliot Hosewater:
In general, if you are selling options you go for shorter expiration, if you are buying you get more value for longer expiration.
In silver futures you don't have a time limit, is that right? You just have to be able to sweat it out if there is a move against you?
Futures do have expirations, but you can roll them. Futures don't decay, if that's what you meant. There's basis risk though.
Options on futures work exactly the same as equity options.