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Guy,
write as short term options as possible as time decay, not a linear
function, will help you, and becomes steeper within the 30 last days, it
will certainly help.
risk will certainly be addressed in the pricing model, and the longer the
option exercise date, larger premium should be demanded(other variables held
constant).
nevertheless, considering shorter term option writing will make the
operations cicle shorter for you to learn more rapidly.
good luck,
Nicolas
Buenos Aires, Argentina
-----Mensaje original-----
De: Guy Tann <grt@xxxxxxxxxxxx>
Para: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Fecha: Lunes 19 de Junio de 2000 20:08 PM
Asunto: RE: Selecting options or writing uncovered options
>Alex
>
>It's already approved and set up. Got final approval for uncovered sales
>last week.
>
>I think what helped was that we have been trading futures for over 40
years,
>have a pretty good income without trading and maintain a fairly good size
>account with them. In addition, when I was speaking with their auditor
>(checking out our application) I mentioned that options and stocks are what
>we consider to be secure investments after over 40 years of futures
trading.
>He laughed and agreed. :)
>
>Now, since we'll be starting small, do we write short term options or
longer
>term ones?
>
>Guy
>
>Paranoia...you only have to be right once to make it all worthwhile!
>
>-----Original Message-----
>From: owner-metastock@xxxxxxxxxxxxx
[mailto:owner-metastock@xxxxxxxxxxxxx]On
>Behalf Of The Doctor
>Sent: Monday, June 19, 2000 1:52 PM
>To: metastock@xxxxxxxxxxxxx
>Cc: Metastock User Group
>Subject: Re: Selecting options or writing uncovered options
>
>Guy,
>
>First it is unlikely your equity will allow you an account that allows the
>selling of index options. Make certain you can do the strategy first.
>
>Guy Tann wrote:
>
>> List,
>>
>> Well, here I come again from our normal position of ignorance.
>>
>> We're planning on getting more involved with options. For our next sell
>> signal that could arrive any day now, we plan on writing SPX Calls and
OEX
>> Calls in addition to buying SPX and OEX Puts. We have very little
>> experience buying options and have had beginners luck with our first 5
>> trades. Now we're going to get a little serious here and try to make a
>few
>> bucks.
>>
>> We've each budgeted $10,000 for buying options and another $10,000 as our
>> exposure writing options.
>>
>> Now, I'm busy reading my option book, like a good little student. Since
>we
>> lucked out with our previous trades we're feeling overconfident. :) I do
>> have a question regarding buying options (since I haven't gotten to that
>> chapter yet):
>>
>> How should I select what option to buy? Currently I select 'in the
money'
>> options and look for option months that have a pretty large open
interest.
>> Is there a formula or a decision process we can apply to pick the right
>> option month?
>>
>> In terms of writing uncovered options, my question is basically the same.
>> How do we determine which options to write? I guess, even more important
>> is, do we write options that expire out 3 months or would we write the
>near
>> month options? Again, since we're short term traders and will probably
be
>> buying these back before they expire, my guess is that we should write
the
>> near month.
>>
>> Additionally. my idea is that we should write 'in the money' options with
>> pretty good open interest. Again, I'm sure there is a methodology
>somewhere
>> that would help us make a semi-intelligent decision.
>>
>> Any recommendations or thoughts would be appreciated.
>>
>> Thanks,
>>
>> Guy
>>
>> Paranoia...you only have to be right once to make it all worthwhile!
>
>
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