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Old September 1st, 2011, 12:10 PM
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Dyepaintball12 Dyepaintball12 is offline
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Default Options Trading

Does anyone here trade options? I have been out of the trading game for awhile but am at the point with my BR where I can put some money into trading again
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Old September 2nd, 2011, 09:27 PM
Thunder Thunder is offline
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Sorry, can't help you there. I trade futures as you probably know.
  #3  
Old September 3rd, 2011, 04:44 PM
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Automatic Monkey Automatic Monkey is offline
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Default Not a fan of derivatives

If you want to try something very interesting and speculative, try forex, on this site:

http://www.oanda.com

I can vouch for their legitimacy. It's also a great way to trade spot gold & silver- you can trade in any amount with tiny spreads, small storage fees, and a 40:1 leverage on your money.

An interesting fact about forex and gold is it's traded 24 hours a day, so casino AP's will enjoy the schedule.
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Old September 3rd, 2011, 05:00 PM
21forme 21forme is offline
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I don't trade them, but I sell them and let them expire. Been selling Puts against SPY every few months for about 6% return. Only once (just recently) have the shares been put to me when the price dropped just below the strike. Sold them. Repeat and rinse.
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Old September 3rd, 2011, 09:19 PM
Brock Windsor Brock Windsor is offline
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Quote:
Originally Posted by Dyepaintball12 View Post
Does anyone here trade options? I have been out of the trading game for awhile but am at the point with my BR where I can put some money into trading again
If you don't know your edge and how to price an option relative to the expiry and the stock price I would not recommend. Like AP there is money to be made by a skilled trader but you've got to put the time in to learn first. Of course a strategy that has worked in the past is not guaranteed to work in the future. I did well when I was new to trading trying to trade options like I would stocks... then the inevitable effect of too much leverage and I gave it all back. Back then I thought option trading was investing and blackjack was gambling.. the opposite is true for me now. If you're serious do a lot of paper trading and back testing first, there is a lot to learn.
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Old September 4th, 2011, 09:56 AM
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Automatic Monkey Automatic Monkey is offline
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Quote:
Originally Posted by 21forme View Post
I don't trade them, but I sell them and let them expire. Been selling Puts against SPY every few months for about 6% return. Only once (just recently) have the shares been put to me when the price dropped just below the strike. Sold them. Repeat and rinse.
Daring! An insider who is planning on starting a fire at a facility, or leaking some damaging information a few days before the expiry may be the one to buy your options.
  #7  
Old September 4th, 2011, 10:21 AM
nicetrades200303 nicetrades200303 is offline
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Quote:
Originally Posted by Dyepaintball12 View Post
Does anyone here trade options? I have been out of the trading game for awhile but am at the point with my BR where I can put some money into trading again
I do. If you're disciplined and know what you're doing, it's a good skill to have. If done properly, options generate decent profits while committing less capital.
  #8  
Old September 4th, 2011, 10:43 AM
nicetrades200303 nicetrades200303 is offline
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As with trading equities, having a stop loss is of the utmost importance in trading options. For example, say you bought YHOO at the peak of the Internet bubble, and youíre down $50K because you did not obey your stop loss. As of today youíre still waiting for YHOO to go back up so you can get even. Well, you canít do that with options. If you have an option position and you disobey your stop loss and wait for a turnaround, not only do you lose more money as the underlying stock moves against you, you also lose money because the options will decay their time value.

Putting on a trade is the easy part. Taking it off is the more difficult part--it took me a while and a lot of money to learn this lesson.
  #9  
Old September 4th, 2011, 12:56 PM
21forme 21forme is offline
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Quote:
Originally Posted by Automatic Monkey View Post
Daring! An insider who is planning on starting a fire at a facility, or leaking some damaging information a few days before the expiry may be the one to buy your options.
SPY is the S&P 500 index. They'd have to start a lot of fires to make a difference.
  #10  
Old September 4th, 2011, 04:48 PM
Brock Windsor Brock Windsor is offline
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Quote:
Originally Posted by nicetrades200303 View Post
As with trading equities, having a stop loss is of the utmost importance in trading options. For example, say you bought YHOO at the peak of the Internet bubble, and youíre down $50K because you did not obey your stop loss. As of today youíre still waiting for YHOO to go back up so you can get even. Well, you canít do that with options. If you have an option position and you disobey your stop loss and wait for a turnaround, not only do you lose more money as the underlying stock moves against you, you also lose money because the options will decay their time value.

Putting on a trade is the easy part. Taking it off is the more difficult part--it took me a while and a lot of money to learn this lesson.
The option has to be very liquid for the stop loss to be effective. I wouldn't leave an automatic stop loss on for most options, there is too much slippage. This also provides opportunity for an active trader or a black box to game your position. Nicetrades manages all this I'm sure, just mentioning for the OP and other readers.
 

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