Question for the experts, please

A

Ansare

I regularly trade /SI and occasionally place an option trade for giggles. Have been working on something I'd like to try with a bit more serious effort and need some advice.

Love the liquidity of spy and the q's but prefer those that move more like goog/amz/bidu etc. Are there a few generally accepted and well-known products which offer good volume but higher volatility that I'm missing?

BTW, I have awesome respect for anyone who regularly is profitable trading options. The complexity is pretty mind-boggling.

Thanks very much.
 
Quote from Ansare:

I regularly trade /SI and occasionally place an option trade for giggles. Have been working on something I'd like to try with a bit more serious effort and need some advice.

Love the liquidity of spy and the q's but prefer those that move more like goog/amz/bidu etc. Are there a few generally accepted and well-known products which offer good volume but higher volatility that I'm missing?

BTW, I have awesome respect for anyone who regularly is profitable trading options. The complexity is pretty mind-boggling.

Thanks very much.
More...

Well, first off, options, like trading, is as simple as you'll let it be, or as complicated as you want to make it.

Higher vol, more likely movement. The Pro's, on and off the floors, can respond immediately, with and without HFT algo's.

Before going forward, be sure you understand the concept of conversions completely. Check them out before placing any trades, and you'll find that every option is priced within pennies of fair value based on interest rates and time to expiration.

After that, think about earning theta's, simply time decay. To quote a famous friend of mine "Options are meant to be sold."

If you have specific questions, let me know. If I can't help, I'm sure Atticus can.

Don
 
Quote from Don Bright:
After that, think about earning theta's, simply time decay. To quote a famous friend of mine "Options are meant to be sold."
More...
I am sorry for your loss :).

In general, with all due respect, Don, I think you should be more careful with recommendations like this, especially when addressed at novices. The proper understanding of all the nuances of your friend's somewhat correct statement requires experience and hard work. Without proper understanding, the recommendation can be misleading and a recipe for complete and utter disaster.
 
Quote from Don Bright:

Well, first off, options, like trading, is as simple as you'll let it be, or as complicated as you want to make it.

Higher vol, more likely movement. The Pro's, on and off the floors, can respond immediately, with and without HFT algo's.

Before going forward, be sure you understand the concept of conversions completely. Check them out before placing any trades, and you'll find that every option is priced within pennies of fair value based on interest rates and time to expiration.

After that, think about earning theta's, simply time decay. To quote a famous friend of mine "Options are meant to be sold."

If you have specific questions, let me know. If I can't help, I'm sure Atticus can.

Don
More...

Appreciate the reply and additional information, thank you. But unless it went zooming over my head I didn't see a reply to my question: "Are there a few generally accepted and well-known products which offer good volume but higher volatility that I'm missing?"
 
Quote from Ansare:

Love the liquidity of spy and the q's but prefer those that move more like goog/amz/bidu etc. Are there a few generally accepted and well-known products which offer good volume but higher volatility that I'm missing?
More...

At the very top of the EliteTrader website is a green band; click on Options Analysis; hover your cursor over tabs that are displayed for imp/hist vols, volumes, etc.

Yahoo Finances' Option section for additional info.

Optionistics is another source.

The above are free and may be of some interest to you.
 
Quote from Martinghoul:

I am sorry for your loss :).

In general, with all due respect, Don, I think you should be more careful with recommendations like this, especially when addressed at novices. The proper understanding of all the nuances of your friend's somewhat correct statement requires experience and hard work. Without proper understanding, the recommendation can be misleading and a recipe for complete and utter disaster.
More...

+1
 
Quote from Nanook:

At the very top of the EliteTrader website is a green band; click on Options Analysis; hover your cursor over tabs that are displayed for imp/hist vols, volumes, etc.

Yahoo Finances' Option section for additional info.

Optionistics is another source.

The above are free and may be of some interest to you.
More...

That's very helpful, Nanook, I'm on my way now, thank you.
 
Quote from Ansare:

Appreciate the reply and additional information, thank you. But unless it went zooming over my head I didn't see a reply to my question: "Are there a few generally accepted and well-known products which offer good volume but higher volatility that I'm missing?"
More...

here is a link to finviz, you can screen for high beta etc. There are some high vol issues which I would stay away from, high vol plus illiquid is a recipe for disaster.


http://finviz.com/screener.ashx?v=171&f=cap_largeover,sh_avgvol_o100,sh_opt_option&o=-beta
 
Quote from Martinghoul:

I am sorry for your loss :).

In general, with all due respect, Don, I think you should be more careful with recommendations like this, especially when addressed at novices. The proper understanding of all the nuances of your friend's somewhat correct statement requires experience and hard work. Without proper understanding, the recommendation can be misleading and a recipe for complete and utter disaster.
More...

Sorry for what loss? Am I missing something?

I don't think any newbie should trade options at all. Learn the conversion valuations, then they will view all the hype much differently.

If you buy an option, every day causes you to lose premium. If you're dead set on betting on direction, then you have the same risk with deep ITM that you do by buying the stock. To buy OTM calls hoping for big move, is just not great risk reward IMO.

If you buy calls or puts, all you risk is everything you paid. If you sell them, and understand that about 90% go out worthless (please check that number, it may have changed with more index options being traded), then the risk reward seems to make more sense.

And, yes, I agree that some basic understanding of the simplicity of options should be a no brainer, before risking any $$.

Don
 
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