Thanks for the advice yall..I'm going to look into this fancy smancy stuff.

My picks in March allowed me to beat 83% of the Marketocracy community compared to beating only 26% in December however it personally seems that the calm period is over. Whether it is all to do with Greece or there is another factor I havent picked up on, my last months gains in my markocracy portfolio have been destroyed

quote:

Originally posted by Capitalizt Thanks for the advice yall..I'm going to look into this fancy smancy stuff.

Options As A Strategic Investment - Lawrence

Don't even think about options until you have this book to reference. There's so much in it, like reading the bible. Impossible to read all at once.

I now own 7 Dec 2010 $20 call options on TNDM. Wednesday, they report earnings and I am expecting a big move. Thought about doing a straddle but I my view is so heavily biased to the upside, I didn't want to use any capital for puts.

I haven't really touched my portfolio in a while (6 months). Just sitting back and collecting my dividends. Thought about shorting oil, or BP at least, but meh.

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My options are getting downright murdered. I'm down 24%. I wish I could have started over and hedged something. But I am going to hold out. Fucking Greece. TNDM has nothing to do with that shit but they get caught up in the maelstrom just like everybody else.

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Originally posted by Comrade Stalin My options are getting downright murdered. I'm down 24%. I wish I could have started over and hedged something. But I am going to hold out. Fucking Greece. TNDM has nothing to do with that shit but they get caught up in the maelstrom just like everybody else.

That's the nature of a leveraged product. They move fast as hell. My market puts were up 150% today. Not sure if I should've sold more (I sold 20% of them). Still too much uncertainty out there to not have some hedges on, imho.

Lessons learned.

1) Don't buy call options if the stock's stochastic oscillator is above 20%.

2) Spread positions with a delta neutral strategy by buying puts in the worst company in a given industry.

Shakka, any tips on how I should go forward?

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Originally posted by Comrade Stalin Lessons learned. 1) Don't buy call options if the stock's stochastic oscillator is above 20%. 2) Spread positions with a delta neutral strategy by buying puts in the worst company in a given industry. Shakka, any tips on how I should go forward?

I don't get into gamma, delta, etc. I have people calling me all the time trying to sell me on these complex options strategies. At the end of the day I just think they're trying to line their pockets at my expense. My honest experience is that it's easier to make money as a writer of options than as a buyer of them--but make sure your position is covered if you're going to write anything that exposes you to more risk.

I have a friend who has made a ton of money with options--he basically writes an option spread at the beginning of each month (i.e. say gas is at $2.50...he might sell $4 calls and $2 puts and basically wager that gasoline stays inside of that range. If he's right he keeps all of the income.

Just gotta be careful with them and trade them opportunistically I guess (at least imho.)

New strategy.

1) Buy call option only when stochastic oscillator is less than 20%.
2) Buy put option to neutralize the delta and so make money whether the market goes up or down.

I have 6 months so I expect this European debt crisis to abate. In the meantime, I'm scrounging for more cash to increase my call option position and buy put options.

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Originally posted by Shakka I don't get into gamma, delta, etc. I have people calling me all the time trying to sell me on these complex options strategies. At the end of the day I just think they're trying to line their pockets at my expense. My honest experience is that it's easier to make money as a writer of options than as a buyer of them--but make sure your position is covered if you're going to write anything that exposes you to more risk. I have a friend who has made a ton of money with options--he basically writes an option spread at the beginning of each month (i.e. say gas is at $2.50...he might sell $4 calls and $2 puts and basically wager that gasoline stays inside of that range. If he's right he keeps all of the income. Just gotta be careful with them and trade them opportunistically I guess (at least imho.)

How much time does he allow for expiration of those options? 3 months?

Do you set position limits? Like you won't put more than 10% of your portfolio into a certain stock or option.

Say I write a covered call option. If the buyer exercises that option, I have to buy 100 shares of that stock at the market price and sell it to the buyer for the strike?

I write a covered put option, if the put option is exercised, I must buy 100 shares of the stock, at the strike?

Can you give me a detailed example of a successful and unsuccessful options trade that you have done?