Starting out trading options

[Alrosa]

Quote from Gravestone Doji:

What a bunch of crap. Do not post your spam here, it's not welcome. Nobody asked for info relating to the junk you posted (stock mastery, e-minis, lessons taught in school, etc) and these websites you posted are nothing but a load of marketing crap.

Take your spam elsewhere.

Pretty sure it is spam as at least two of these businesses have been known to offer good incentive payments for referrals. So potentially yonglonglai would make money from anyone signing up from his link.

Is this so, yonglonglai?

Here is a bit of background on one of them (ASIC is the official Australian Government's investment commission)
http://www.asic.gov.au/asic/asic.ns...tion+of+wealth+creation+seminars?openDocument

 

[allonred]

Quote from optioncoach:



P.S I wrote the Option Trader Handbook so let me know if you have any specific questions. It is not a pure beginner text but can still be helpful if you learn the greeks as discussed above. [/B]

Hi Phil,

I did have a couple of questions for you. After reading over chapter 2 of the handbook a couple of times. Is the best way to tell in something is cheap or expensive is to look at how the IV compares to the historical volitility range?

When you said to follow the option prices and greeks, is end of day data ok?Just once a day pull the data into a spreadsheet and monitor the change. I am planning on opening account with tos next year so maybe they will let me use a demo account beyond the 1 month. Or is there a better resource, maybe the link you recommended. Thank you.

red

 

[El OchoCinco]

Quote from allonred:

Hi Phil,

I did have a couple of questions for you. After reading over chapter 2 of the handbook a couple of times. Is the best way to tell in something is cheap or expensive is to look at how the IV compares to the historical volitility range?

When you said to follow the option prices and greeks, is end of day data ok?Just once a day pull the data into a spreadsheet and monitor the change. I am planning on opening account with tos next year so maybe they will let me use a demo account beyond the 1 month. Or is there a better resource, maybe the link you recommended. Thank you.

red

Volatility is a good way to determine if an option is relatively cheap or expensive compared to where the underlying's options have been priced in the past. So you can look at current IV and the 52 week historical IV which you can find on ivolatility.com. There are some caveats of course in that low vols can keep getting lower and high vols can keep getting higher and if the stock undergoes a major pricing shift then the whole range can shift as well going forward. However, you are looking for a relative measure and it is the best one.

When IV is relatively high the contrarian and mean-reverting approach is that IV will contract and if IV is relatively low, it will pick up. So looking at IV first you can get a sense of what strategies might work better than others.

For example if you want to do a butterfly, you might prefer it when IV is high when FLYs are cheaper over when IV is low and FLYS are more expensive and IV is more likely than not to increase.

If you wanted to buy a straight long call or long put, looking at IV will let you know if they are relatively expensive or not. If IV is extremely high, know that you are paying higher relatively than in the past and now you also have to contend with IV crush if the IV is inflated due to earnings or other announcements pending.

FOr educational pusposes and for long-term trading, once a day check on greeks is fine for now. If you are using any decent options broker you will get live greeks anyway so not a concern then. For now, ivolatility.com or CBOE data on greeks is enough to track and learn.