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You don't buy options? I assume you don't mean
that. As for margin requirements your broker probably has a document/table
that has the information that you need.
Bill
----- Original Message -----
Sent: Wednesday, February 27, 2008 12:19
PM
Subject: Re: [amibroker] Re: PA% Upper
limits - was {Absolute value ATR?---> and some hope for building a
sy}
Do you need more money to get into futures, as you are forced
to buy (with options you are not)?
Louis
2008/2/27, Dennis Brown <see3d@xxxxxxxxxxx>:
Futures also have time decay, but it is at a more sensible rate tied to
the current interest rate. Futures also expire and must be "rolled
over" to stay in a position. With options, you can buy LEAPS which
have a long time to expiration, and a more sensible time decay.
However, the bid/ask spread is larger, and the short term leverage is
less.
Dennis
On Feb 27, 2008, at 11:42 AM, wavemechanic wrote:
Option's time decay is one significant
difference relative to futures which requires you to think about your view
of the stock going forward. Profit potential is primarily a function
of you and to a lesser extent the vehicle.
Bill
----- Original Message -----
Sent: Wednesday, February 27, 2008 10:36
AM
Subject: Re: [amibroker] Re: PA% Upper
limits - was {Absolute value ATR?---> and some hope for building a
sy}
Hi,
I have some experience with options, and it
seems to me that options far in the money can be a good alternative to
actually buying the stock itself. My real question was to know if
there is really a big difference between futures and options and how
futures actually compare to options in term of profit
possibilities.
But you are right: options can be disastrous if
one is not cautious!
Louis
2008/2/27, Dennis Brown <see3d@xxxxxxxxxxx>:
Louis,
Bid/Ask Spread, IV, Theta, Beta, Gamma, life cycle of the time
decay. Don't trade options until you have internalized what
these mean to your profits. Otherwise, it would be like trying
to play chess without knowing how the knight moves --you will get
slaughtered. Profits are in the marginal areas.
Do some simulations and see how sensitive the profits are to the
cost of a trade.
I have strayed a bit far from the purpose of this forum at this
point. You would be better off looking for more specialized
places for these basics. I learned by using the option tools at
thinkorswim, and living through the life cycle of many trades.
Once you understand options, futures will be a piece of cake to
understand --though much riskier in a significant news event
environment.
Best regards,
Dennis
On Feb 27, 2008, at 8:45 AM, Louis Préfontaine wrote:
Hi Dennis, What do you mean by option
having a heavy « overhead »? I had the plan to buy options in
the money when I get a signal from my system. Wouldn't that be
a good plan? In what futures would be better than
options? Thanks, Louis
2008/2/26, Dennis Brown <see3d@xxxxxxxxxxx>:
Louis,
I trade stock, options, and futures.
Futures are leveraged. That means that you are
essentially borrowing the money to buy and sell an index with a
small "down payment". Say you wanted to trade the SPX
S&P 500 index ($1381.29 close today). You could trade
the SPY ETF for $138.36/share. It will cost you $69,180 for
500 shares and you get $50 profit per SPX point ($34,590 on 2x
margin, or $17,295 on 4x day trader margin). You could trade
the ES futures contract for about $5000 down payment on 1 contract
to get the same $50 profit per point. That is a lot more
leverage. With a $100K account, you can do a lot more with
futures than stock. However, with leverage, you can lose
more than the size of your account --very quickly. Money
management and working your way up to more leverage with
experience is an absolute requirement. In the US,
futures profits are given more favorable tax rates.
Options allow you to have leverage similar to futures and
risk no more than your purchase. However, they have a heavy
"overhead" per trade.
Each has its advantages and disadvantages and it is best to
tailor their use to a particular situation.
Best regards,
Dennis
On Feb 26, 2008, at 10:35 PM, Louis Préfontaine
wrote:
Would you consider there is more money to be made from
futures than from stock? Louis
2008/2/26, brian_z111 <brian_z111@xxxxxxxxx>:
http://en.wikipedia.org/wiki/Larry_Williams_(trader)
http://www.robbinstrading.com/worldcup/standings.asp
Scroll
down for historical results.
---
In amibroker@xxxxxxxxxxxxxxx, "brian_z111"
<brian_z111@xxx> wrote: >
> Howard, > >
>Any time someone suggests a growth of more than about 40%
per year, >
>take that with a very large grain of
salt. > > I expected you to
disagree with my statement. > I'm sure a lot of traders
would be aghast at the numbers I
quoted as > the
theoretical potential. > > At
his website Professor John Price posts audited returns of
approx > 20-25% PA over a 5 year
period, or more, using simple Techno- > fundamental
methods (as I recall the
figures). > > The caveat there
is that the sample period is short and
selective. > > Trading on
margin that would return 30-35% PA with less than
half an > hour
a days work and no effort to use any other timing
mechanisms. > > If your
statement is true we can all give up any further
efforts and >
simple trade his method. > >
Similarly, the ASX, which is a high dividend paying market
(due to > franking) has total returns
of in excess of 15% PA on average
over > longer time periods. >
Using simple leveraged buy&hold strategies that is 20-25%
without any >
ongoing effort required
what-so-ever. > > In "Stock
Market Wizards", Schwager, Jack.D, Harper Business
2001 the >
first page of the first chapter in the book quotes Stuart
Walton, > fund manager, who achieved
"115 percent average annual
compounded > return in trading
profits" un 8 consecutive years during
the nineties. > >
As I understand it Schwager's books are well researched and
based on >
verifiable case studies? > > I
only opened the book at the first chapter and didn't need to
go any >
further or to his other 2 books containing similar
testimonies. > >
brian_z >
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