i will readily admit i am not that sophisticated in my understanding of options
however, i am reasonably profitable, so i must be doing something right
i write options on stocks (naked puts) that i don't currently own, but want to own (usually a combination of fundamentals and technicals), and just keep collecting premium (might write several of these things over time) until the stock sells off for some reason and there you go.
a good example of this was PIXR. loved the stock. but too expensive for me. So, i wrote a nekkid put. it sold off on the "dissapointing DVD sales of incredibles news" and of course the market overreacted. great company. steve jobs. nothing more needs to be said, and that was my long entry. worked well
i sell only covered calls (not naked) on stocks I own, usually when the stock is near resistance)
as for position plays, I choose directionals i like. then, I wait for some overreaction selloff (if wanting to buy calls) where people are dumping the calls left and right and they get oversold, and i'm in.
i realize this is not very sophisticated, and i don't get into the greeks very much if @ all. but it does work.
i like spread trades too, but i find futures fit my needs more for these. like being long one index futures contract, and short another because i see a tightening (or widening) of the spread between their performances. this is not too difficult to discern (which indexes are underperforming vs. others). the trick is more determining when the good entry is - when the divergence is unsustainable and a regression to a mean is more inevitable.
futures work great for these, but options obviously an option (no pun intended ) too
however, i am reasonably profitable, so i must be doing something right
i write options on stocks (naked puts) that i don't currently own, but want to own (usually a combination of fundamentals and technicals), and just keep collecting premium (might write several of these things over time) until the stock sells off for some reason and there you go.
a good example of this was PIXR. loved the stock. but too expensive for me. So, i wrote a nekkid put. it sold off on the "dissapointing DVD sales of incredibles news" and of course the market overreacted. great company. steve jobs. nothing more needs to be said, and that was my long entry. worked well
i sell only covered calls (not naked) on stocks I own, usually when the stock is near resistance)
as for position plays, I choose directionals i like. then, I wait for some overreaction selloff (if wanting to buy calls) where people are dumping the calls left and right and they get oversold, and i'm in.
i realize this is not very sophisticated, and i don't get into the greeks very much if @ all. but it does work.
i like spread trades too, but i find futures fit my needs more for these. like being long one index futures contract, and short another because i see a tightening (or widening) of the spread between their performances. this is not too difficult to discern (which indexes are underperforming vs. others). the trick is more determining when the good entry is - when the divergence is unsustainable and a regression to a mean is more inevitable.
futures work great for these, but options obviously an option (no pun intended ) too