The "haves" and the have "N.O.T.S." (Novice Options Traders)

Very well put Donna ... I didn't get the chance to post a reply to white yesterday.


Quote from DonnaV:

white...if you are doing straight puts or calls I would tend to agree that you may want a stop loss in place since you are trading directionally the underlying equity or index. However vertical spreads, calendar spreads or other types of option "spreads" by definition have already "stops" built into them. If I do a bull call spread for instance I know exactly the max risk/reward I have going in. If you try to put a trailing stop or really any kind of stop loss you can easily get wipsawed out of your position. You are far better off letting the spread do its thing and only close when you have a pre-defined profit or if you feel situation has changed on the underlying and you were wrong to place the spread in the first place.

Ppl do have different "rules" they follow...but the main thing is consistency and patience in option spread trading.
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Folks,

When I get a little more capital in this account, were going to add the wild west of OEX...this is a mover and should provide some education through the Peak Investing Advisory...

This will be a nice diversification to the account with fast weekly trades.

Be patient the trades and the commentary will come...Where is Optionscoach? Perhaps he is waiting for something tangible to talk about...

Michael B.
 
Quote from ElectricSavant:

You will notice when a spread gets put on...the balance goes up before exiting. You get the premium up front and as the spread decays you give it back maybe...

To save commish they usually let one side expire...so there goes the statistics that over 90% of option trades expire worthless or something like that....It does not necessarily mean traders took losses...

Michael B.
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Yes, with CREDIT spreads the Cash Balance of your account goes up because of the premium you recieve. You'll notice however, that the Net Liquidating Value has decreased by the amount of the commissions you paid.

This merely reflects the idea that the credit recieved only exists at a worthless expiration. If you were to choose to close the trade before then, you'd have to give up the present value of the spread. Thus, the credit recieved in some sense only has future value.

On the other hand, you do receive interest on the credit.
 
This is great for the cash flow...


Quote from Cache Landing:

Yes, with CREDIT spreads the Cash Balance of your account goes up because of the premium you recieve. You'll notice however, that the Net Liquidating Value has decreased by the amount of the commissions you paid.

This merely reflects the idea that the credit recieved only exists at a worthless expiration. If you were to choose to close the trade before then, you'd have to give up the present value of the spread. Thus, the credit recieved in some sense only has future value.

On the other hand, you do receive interest on the credit.
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Quote from Cache Landing:

On the other hand, you do receive interest on the credit.
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Because it will probably be mentioned sometime....

Some prefer DEBIT spreads which, when properly constructed are technically the same as the credit spread. (i.e. an OTM credit spread = an ITM debit spread with the same stikes) The difference you'll notice is that you don't recieve the premium like in the case of CREDIT spreads. Thus, you can't earn interest on that premium. However, that interest is priced into the DEBIT spread, so you really are receiving it regardless.

Some would point out that the interest they receive on the credit is lower than that which is priced into the DEBIT spread. The difference is usually very minimal, but with a large account it could add up. My take on it..... I prefer the CREDIT spreads for the fact that certain adjusments are less margin intensive. This will probably be discussed later on.
 
You folks are awesome....I always have something to say, but I am soaking up these easy short posts like a sponge!

Please share all of your secrets as I wanna talk' greek with ya' some day...

I'm going to the Gym in a couple of hours... my day is almost done...then back to scalping currencies this evening for my 5% per month...

then there is sleep...have not done that in a while...maybe I will get Wifey to watch the scalps for a couple of hours so I can get in a couple of hours...

Michael B.
 
I'm just curious Michael, did you use any other advisory services before and if so, how was your experience with them? Also, have you used any of those option education services? Things like options made easy, wizetrade, optionetics to name a few? How's your experience with those? I'd like to get your opinion.
 
Michael...I consider myself an extremely novice options trader but I believe I can do reasonably well with them. Thank you for your kind words however. I'm just curious, you seem to do very well trading FX so WHY are you interested in options?

For myself since I think I can do ok with options I do it...but FX and ES and all the other fast daytrading stuff I think I would basically suck at so I kinda stick to what I think I can do.
 
No...I do not believe in advisories or signal services...are you confused now?

The advisories that I would spend 10 seconds with to consider would only be actual trade history performance results not hypothetical's...

Crowder is the first advisory that I have tried that published hypotheticals. But I have received a private reference on the trader. But this is not my endorsement as I value my recommendations and need to verify them, before I go shootin' my mouth off.

Wizetrade ooooh my gawd.... lol. Optionetics whats that?

Michael B.






Quote from jj90:

I'm just curious Michael, did you use any other advisory services before and if so, how was your experience with them? Also, have you used any of those option education services? Things like options made easy, wizetrade, optionetics to name a few? How's your experience with those? I'd like to get your opinion.
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I make my 5% a month (actually I am up 5% as of today for this month...so i just scalp a few daily without any pressure now...I am getting old) But if you know me you will know that it I preach it is absolutly necessary to diversify when building your retirement.

I am fascinated with options and will make 5% a month with them too! with your help!!!

Michael B.


Quote from DonnaV:

Michael...I consider myself an extremely novice options trader but I believe I can do reasonably well with them. Thank you for your kind words however. I'm just curious, you seem to do very well trading FX so WHY are you interested in options?

For myself since I think I can do ok with options I do it...but FX and ES and all the other fast daytrading stuff I think I would basically suck at so I kinda stick to what I think I can do.
More...
 
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