StockFetcher Forums · General Discussion · speculators only<< >>Post Follow-up
mystiq
650 posts
msg #86869
Ignore mystiq
1/23/2010 3:57:26 AM

if the market would suddenly drop 200-300 points, option PUTS would increase dramatically (whether they are same month or LEAP options)...also if the market would suddenly rise 200-300 points, option CALLS would increase dramatically (whether they are same month or LEAP options). My recos play the ultimate speculator. The object is to establish a monthly option position for the sudden market move with the LEAST investment with the MOST reward. For example;

Powershares QQQQ
PUT OPTIONS Expire at close Tue, Mar 30, 2010
Strike Symbol Last Chg Bid Ask Vol Open Int
30.00 UYQOD.X 0.06 0.03 0.06 0.08 820 267
32.00 UYQOF.X 0.10 0.06 0.10 0.12 1,222 2,908
33.00 UYQOG.X 0.14 0.07 0.13 0.16 700 3,120
34.00 QAVOH.X 0.10 0.04 0.13 0.15 21 5,070

UltraShort S&P500 Prpshares SDS
CALL OPTIONS Expire at close Fri, Feb 19, 2010
Strike Symbol Last Chg Bid Ask Vol Open Int
48.00 SSHBV.X 0.32 0.22 0.32 0.34 586 155

Ultra S&P500 Proshares SSO
PUT OPTIONS Expire at close Fri, Feb 19, 2010
Strike Symbol Last Chg Bid Ask Vol Open Int
28.00 SOJNB.X 0.25 0.13 0.24 0.26 110 340


...you would only look to hold option for the current month only. The option should NOT cost more than .20, whereas your monthly speculative commitment should not go over $100. Now if the market turns, you will always have a speculative hedge to your trading. The trick is to find the best CHEAP/LOW-COST/UNDER-VALUED High DELTA/GAMMA option play, preferably under .10, to capture any market turns for the MONTH. >>the cheaper, the better, so if they expire worthless, the most you will be out is your speculative amount(=<$100) and if the market turns, the reward is nice.

*speculate for one month. 6 months. or even a year, using LEAPS*

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