StockFetcher Forums · General Discussion · Options are a rip-off<< 1 2 >>Post Follow-up
karennma
6,831 posts
msg #82416
Ignore karennma
11/4/2009 10:13:01 AM

Options work well on leveraged ETFs, but not on stocks.
If you hold an option for a week, it won't be worth ch*t 5 days later, EVEN if the stock moves up.
i.e., .. I bot some calls when "V" was $74. "V" hit $79.45 this a.m., my option doesn't even cover my commission.
What a bunch of ch*t.


karennma
6,831 posts
msg #82422
Ignore karennma
11/4/2009 11:22:58 AM

NO MORE!!
I've reviewed every single options trade I've done in the last 30 days.
Unless their ETFs ... NO MORE for me!
Not worth the bother!
Wa$te of time and money!


karennma
6,831 posts
msg #82423
Ignore karennma
11/4/2009 11:23:16 AM

JMHO, of course.
:>)


machismo
115 posts
msg #82424
Ignore machismo
11/4/2009 11:23:46 AM

sorry to hear that karennma, but don't get discouraged. Maybe trade less for time being.

crunkle
54 posts
msg #82439
Ignore crunkle
11/4/2009 5:22:11 PM

karennma,

So what calls did you buy? The Nov 80's or 85's? Usually buying front month out-of-the-money calls is a suckers game (not sayin' - I'm just sayin'). You need everything to go right and quickly. There's a couple of other ways to do it , namely:

a) buy in-the-money calls with little premium (as a substitute for going long the underlying stock). I did this with Morgan Stanley over the last 2 days. Bought the Nov 30's yesterday @ $2.37 (with the stock at $31.60) and sold right after the open this morning at $3.15. More lucky than smart, I actually bought at the low of the day yesterday and sold at the high of the day today. Never happened before in 32 years.

b) one I also like as a substitute long - shorting in-the-money puts where time (and premium decay) works for you rather than against you. Puts usually carry less premium than calls anyway and you can always protect yourself from disaster by putting on a spread - short the 85's 11 points in-the-money and buy the 70's. You probably would have made close to $5.00 on the short and given up maybe $1.50 - 2.00 on the long. Just watch out for dividend dates.

limestar
79 posts
msg #82463
Ignore limestar
11/5/2009 1:18:30 AM

Like it was said before, once u get down to those last two weeks you need front month trades to go your way and fast. If you bought 80 calls and it only got to 79, people were probably selling that premium and it got crushed after the catalyst was overwith. I'd bet the Dec 80s did well because you have decay on ur side.

mystiq
650 posts
msg #82464
Ignore mystiq
11/5/2009 1:47:08 AM

karennma
- Ignore karennma 11/4/2009 10:13:01 AM
Options work well on leveraged ETFs, but not on stocks.
If you hold an option for a week, it won't be worth ch*t 5 days later, EVEN if the stock moves up.
i.e., .. I bot some calls when "V" was $74. "V" hit $79.45 this a.m., my option doesn't even cover my commission.
What a bunch of ch*t.
==============================
*you have to choose the options with the best {GREEKS}$D-E-L-T-A$, VEGA,THEGA, etc;...avoid same month options....and ONLY buy under-priced value options....and NEVER buy options that are priced over $1.00* follow these rules for success !


karennma
6,831 posts
msg #82470
Ignore karennma
11/5/2009 8:01:34 AM

mystiq
- mystiq 11/5/2009 1:47:08 AM

*you have to choose the options with the best {GREEKS}$D-E-L-T-A$, VEGA,THEGA, etc;...avoid same month options....and ONLY buy under-priced value options....and NEVER buy options that are priced over $1.00* follow these rules for success !

=======================================================================

For the benefit of those reading this thread, would you kindly expound on what you mean by "the best".
i.e.,
Delta < or > or =
Vega < or > or =
Theta < or > or =
Gamma < or > or =
Rho < or > or =




Kevin_in_GA
4,551 posts
msg #82472
Ignore Kevin_in_GA
modified
11/5/2009 9:14:15 AM

*you have to choose the options with the best {GREEKS}$D-E-L-T-A$, VEGA,THEGA, etc;...avoid same month options....and ONLY buy under-priced value options....and NEVER buy options that are priced over $1.00* follow these rules for success !
+++++++++++++++

NEVER buy options that are priced over $1.00*
So you would never buy an in-the-money option on AAPL, BIDU, GOOG, etc? I look at both the bid and ask. On a 25 cent ask, the bid is usually 10 cents or 15 cents. I am looking at a 40-60% loss to be made up before the option can be sold at a profit, so the option better go up alot! If I buy an option at a 2.00 ask, the bid might only be 1.70 (a 15% loss to be recovered before the option is of any value).

For me, the spread should not be more than say 20% of the bid price- most stocks or ETFs move a few percentage points at a time, which may not be enough to drive the low priced options up enough to cover the spread.

avoid same month options....
Why not buy same month options? I know that there is time decay, but there is also volatility (and you can use time decay to your advantage in some cases).

ONLY buy under-priced value options....
how would you determine this?

skymuse
14 posts
msg #82473
Ignore skymuse
11/5/2009 9:20:46 AM

I don't necessarily think in-the-month options are bad if you know what you're doing and/or are incredibly lucky.

Before I tried doing the M4M path, I was playing with in-the-month options with some success; you just have to be able to correctly guess/understand if a particular stock is particularly volatile for the next 1-3 weeks. I made more money (probably due to luck more than anything) doing this than I have with the more prudent out-of-the-month options. That has served only to lock my money up for another 3 weeks before it finally dies at zero.....




StockFetcher Forums · General Discussion · Options are a rip-off<< 1 2 >>Post Follow-up

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