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Jim
What I need is a methodology to help me select the right option and price to
match my future trades. Since I know almost nothing other than losing money
on options, most of your message is Greek to me :).
How do you use those ITM/OTM spreads? And what the heck are vertical and
diagonal? I assume that if I'm going short the S&P futures, my short leg
would be the Puts and the Long leg would be the Calls?
I sent an e-mail to Equis to get info about Option Vue and their $49 month
trial version.
Regards
Guy
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]
On Behalf Of Jim Greening
Sent: Monday, May 25, 1998 6:32 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: I'm Back
Guy,
I haven't traded OEX options for a couple of years since there
are better opportunities in stocks and stock options for my trading
method. When I did, I played the intermediate term trend similar to
the way I do my stock trades. Once I found a good entry point, I did
use the previous version of Option Vu to find the best spread based on
valuation and volatility. I haven't used the current version of
Option Vu, but I imagine it's very similar. It looks at every
straight option purchase, spread, and straddle and ranks them
according to predicted return. I usually ended up doing an ITM/OTM
spread, either vertical or diagonal. If diagonal, I usually went for
six months to expiration on the long ITM leg and current or next month
on the short leg.
MetaStock 6.5 does have a built in tool called OptionScope that
will give you the theoretical option price based on stock price,
volatility, and expiration date. I haven't used it on an index
option, but it should work.
Jim
-----Original Message-----
From: Guy Tann <grtann@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Saturday, May 23, 1998 7:09 PM
Subject: RE: I'm Back
>Jim
>
>I haven't figured out how to trade options using our system. Going
to have
>to work on that and paper trade for a while getting prices off the
net at
>the same time as we execute or futures trades. You would think that
I
>should be able to make a buck here, but every time I tried I lost
money. We
>trade our futures about 8PM PST on Globex. At that time, I don't
believe
>you can trade any options, but I may be wrong.
>
>Can you point me in the direction of learning more about executing
option
>trades and how to determine the price and what premium to pay. There
has to
>be some relationship between option prices, strike prices and future
or cash
>prices.
>
>I noticed that Equis sent me an e-mail about Option Vu and a 30 day
free
>trial. Any thoughts on that? I was told a while ago about always
playing
>in the money and in the current month, since I want to get in and out
fairly
>quickly. For the most part a week or two is a long trade for us. If
I find
>myself in a trade over 25 days, they inevitably turn into losers.
Well, any
>suggestions as to a formula to use would be greatly appreciated.
>
>Regards
>
>Guy
>
>
>-----Original Message-----
>From: owner-metastock@xxxxxxxxxxxxx
[mailto:owner-metastock@xxxxxxxxxxxxx]
>On Behalf Of Jim Greening
>Sent: Saturday, May 23, 1998 12:41 PM
>To: metastock@xxxxxxxxxxxxx
>Subject: Re: I'm Back
>
>Guy,
> We're pretty much in agreement on stocks (see my weekly pick
post
>today). However, I haven't played the indices in a long time
although
>I used to dabble in OEX options. Sounds like you are doing great. I
>wish you continued luck.
>
>Jim
>-----Original Message-----
>From: Guy Tann <grtann@xxxxxxxxxxx>
>To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
>Date: Saturday, May 23, 1998 3:41 AM
>Subject: RE: I'm Back
>
>
>>Jim
>>
>>According to our stuff, we're still in a long term trend up but
>looking
>>pretty toppy. Our system is weighted towards the long side, but
>we'll go to
>>neutral or to a short bias if, and whenever it appears that the long
>term
>>direction has changed.
>>
>>As you know, this can happen overnight :(.
>>
>>As long as you have all of that new money coming into the market
>every month
>>and chasing a fairly fixed amount of equities, you'll have this
>upward bias.
>>When people finally realize that if a stock beats its earnings
>estimate by
>>$.02 and goes up $5, you are effectively taking into consideration
>the next
>>50 year's earnings. But, no matter what, you can't fight the trend,
>and
>>it's most decidely up!
>>
>>As you might remember, we're contrarian traders and don't do well in
>markets
>>without activity.
>>
>>I'll post our actual trades to you this weekend. These will be
>actual
>>trades, including the first one, where I didn't take the stop and
>lost a lot
>>more than I should of. Takes a few trades to get back in sync with
>the
>>market. Even with that stupid play, our account is up 60% net in a
>little
>>under 90 days.
>>
>>Actually I just put the trading sheets together, FWIW. Trading
>account
>>opened 2/26/98 with first trade selling 2/27 Mar S&P 1052. Closed
>the trade
>>at 1095.45 for a 43.45 point loss or about 86% of initial margin.
>Not an
>>auspicious start to say the least. All my fault as my brother was
>off Far
>>East and out of touch. My only excuse is that it was my first trade
>after
>>being off for a year and a half. Didn't execute the stop where I
>should
>>have, so we took the loss. We always trade with 200% of initial
>margin to
>>play 'safe' so we were able to continue on. The loss should have
>been 13.50
>>points rather than 43.45 points.
>>
>>Sold Jun 98 S&P 4/21 at 1135.75. Reversed (went long) 4/29 at
>1095.25 for a
>>profit of 40.50 points, so we're almost even :).
>>
>>Reversed (short) 5/4 @ 1130.25 (average) for another profit of 35
>points.
>>Reversed (long) 5/7 @ 1107.50 for a profit of 23 points. Reversed
>(shorted)
>>5/18 @ 1108.25 for a .75 point profit. Went long at 1110.00 5/19
for
>a 1.75
>>point loss. Right idea but the market moved to much for us on the
>open.
>>Went short at 1118.00 yesterday for another 8 point profit. That's
>the
>>extent of our actual trades for the last 90 days. I'd like to skip
>the
>>first one and do it over again, following our rules, but...
>>
>>So we're 5 out of 7 trades profitable (71.4%) which is a little
below
>our
>>trading average for the last 6 years where we averaged 75%
profitable
>>trades. We're doing our best to not become greedy and do anything
>really
>>stupid. We will increase our trading whenever we accumulate an
>additional
>>200% of margin.
>>
>>Using 20/20 hindsight to correct my first trade screw up, the
numbers
>should
>>be a 71.4% trading percentage (no difference) with 92 points net
>profit. By
>>eliminating the human error, that's a 92% return in 90 days or an
>average of
>>30% a month. That's about as good as it gets when the market is
>humming and
>>our system is working well. Anyway, we'll live with the actual 62%
>profit
>>and go on from here. As long as we keep calling the major market
>turns and
>>we continue with that 30% a month average, we'll do well. If you
>take a
>>look at the account after that first ill fated trade, we're up 185%
>in 60
>>days, but that's just playing with numbers. No way can I
rationalize
>>ignoring that first loss, even though it was out of the ordinary in
>terms of
>>our system and our own rules. Operator error...
>>
>>Anyway, now we'll put our collective heads in the sand and keep very
>quite,
>>just in case I manage to screw up again
>>
>>
>>Regards
>>
>>Guy
>>
>>
>>
>
>
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