What is the optimal time frame for an option buyer?
- Thread starter inandlong
- Start date
pearls of wisdom from metooxx ( not being sarcastic )
Why not a Bear Put or Bear Call Spread? That takes alot of the time decay element out of the equation and it is cheaper to put on because you are selling premium to finance part of the position.
If you are buying premium, like a put outright, the shorter the holding timeframe, the better. You are really putting yourself under the gun, and there's nothing worse than having an option turn around to your favor ten or eleven weeks later, and still losing money on it (done that).
If you are buying premium, like a put outright, the shorter the holding timeframe, the better. You are really putting yourself under the gun, and there's nothing worse than having an option turn around to your favor ten or eleven weeks later, and still losing money on it (done that).
Obviously, he is looking to short stocks which he expects to crash. If he hits an Enron or even just an RJR or TYC, he can make a lot more, also buying just one put will minimize commissions.
Regarding a synthetic short position, if those two option round-trips cost you $2 per contract more in commissions than shorting stock, you have to take that into account. Otherwise I agree with bone, instead of doing a synthetic short, I would rather sell a call spread instead of just the call.
You can only be assigned an option that you are short, on a long option position, you decide yourself whether to exercise it or not.
Metoox I have the option chain up. I see what you mean somewhat about the spread too wide on some vs others.
Also, the DITM's for example have very little time premium...even farther out. But when I close the position I will have to give up some spread.
Of course I am looking for the bigger moves....
Now I have to think... and that always leads to trouble...
Also, the DITM's for example have very little time premium...even farther out. But when I close the position I will have to give up some spread.
Of course I am looking for the bigger moves....
Now I have to think... and that always leads to trouble...
Here is a pretty good link that discusses with a bit more detail which strategies to look for...
http://www.aadsoft.com/tutorial/direct.htm#Semi-futures
http://www.aadsoft.com/tutorial/direct.htm#Semi-futures