Quick Please help me on my first options trade
- Thread starter chewbacca
- Start date
Why would I would I give a serious response to obvious bullshit. You want me to believe Wookie boy entered into an options trade with zero knowledge about the subject. In the States you are required to read the CBOE options pamphlet first. Gimme a break.
chewy,
You are approaching resistence at the 60 level...so not a bad time to see if it his resistence...and breaks back down...HOWEVER.
your stragtegy on that trade is realtive shite....
1. why are you buying SO FRIGGIN FAR out fo the money? what makes you think it will go down so far...ESPECIALLY IN DECEMBER, when energy prices are so high? i think your odds are less than 1:100 of that option going into the money.
2. it was only $75 bucks so who cares....BUT
3. If it was my trade i would have done the following with MUCH higher odds.
-slightly in the money, 2 months out...i would be looking at sept 60 puts
-you have to have volume
-wait for a good entry, meaning it hits resistence and starts to come back down.
-dont hold til expiration...if you are up say 100% look to get out.
you have to REALLY understand stocks before you start playing with options. I would say based on your trade, you are just looking to gamble...which is fine.
But if you really want to make money. learn how to do it correctly first. good luck, have fun.
You are approaching resistence at the 60 level...so not a bad time to see if it his resistence...and breaks back down...HOWEVER.
your stragtegy on that trade is realtive shite....
1. why are you buying SO FRIGGIN FAR out fo the money? what makes you think it will go down so far...ESPECIALLY IN DECEMBER, when energy prices are so high? i think your odds are less than 1:100 of that option going into the money.
2. it was only $75 bucks so who cares....BUT
3. If it was my trade i would have done the following with MUCH higher odds.
-slightly in the money, 2 months out...i would be looking at sept 60 puts
-you have to have volume
-wait for a good entry, meaning it hits resistence and starts to come back down.
-dont hold til expiration...if you are up say 100% look to get out.
you have to REALLY understand stocks before you start playing with options. I would say based on your trade, you are just looking to gamble...which is fine.
But if you really want to make money. learn how to do it correctly first. good luck, have fun.
If you ain't BS'ing and bought the options without knowing what you're doing, well at least you have balls. Call up your broker and tell him you want to start writing options, what the hell go for it.
No, in the States the broker is required to give you the CBOE pamphlet, and IIRC you are required to check the box saying you received it.
Edit: Besides he only bought 2 contracts.
They were the cheapest options I could find so I figured I keep my risk to a minimum just to get my feet wet.
Reason for the trade:
Although XLE may not hit 45, this stock doesn't doesn't seem to be uptrending anymore - its gone choppy after a huge run over the years, indicating a coming correction. Furthermore, it has already taken out the lows for the year so its highly unlikely for a break highs again - especially if we're in a bear market.
I'm sorry but thats the most common newby mistake....your RISK of losing ALL your $75 I would say is MAXIMUM....My strategy and its only one of many....IF I were to go out to Dec...I'd buy Dec 55's for 2.3 and sell sept 55 for 1.10 creating a calendar with a pretty good R/R and keep selling the 55's OCT & NOV....
my initial cost may be a little higher than yours but I'll have a much higher probability of making money on the trade than your straight put.
Quote from RichardRimes:
My strategy and its only one of many....IF I were to go out to Dec...I'd buy Dec 55's for 2.3 and sell sept 55 for 1.10 creating a calendar with a pretty good R/R and keep selling the 55's OCT & NOV....
my initial cost may be a little higher than yours but I'll have a much higher probability of making money on the trade than your straight put.
edit...as a matter of fact thats a damn fine trade
if I do say so myself!Just got filled on Dec/Sept 55put cal for a debt of 1.25...hey thanks Chewy!GL to both of us
Quote from RichardRimes:
My strategy and its only one of many....IF I were to go out to Dec...I'd buy Dec 55's for 2.3 and sell sept 55 for 1.10 creating a calendar with a pretty good R/R and keep selling the 55's OCT & NOV....
my initial cost may be a little higher than yours but I'll have a much higher probability of making money on the trade than your straight put.
I agree 100% with richard, but a calendar is not the most simple strategy there is.
I also agree that simply becuse your investment is low, that deosnt mean that it is low risk. A low risk trade has a good risk rewrd ratio...your R/R is lousy with the 45s. you would be better off buying a nice dinner and paper trading.