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Dick byrd wrote:
>
> Gregg Murray wrote:
>
> > I agree with Joe. I would buy in-the-money options. I think a general
> > philosophy is to sell as much time premium as possible and buy as
> > little as
> > possible. This way, time is not eroding your investment as much
> > percentagewise as if your position is completely composed of time
> > premium.
>
> - - - - - - - - - - - -Gregg:
> You should not think of an option as a long-term investment.
> Therefore don't worry about the premium loss. I rarely hold an option
> position longer than a day or two, and only more than that if the
> option is going up nicely and I'm just counting my profits in it.
> Take a position. If it moves your way, hold onto it as long as it
> does. When it fails -sell it. My OEX Puts I bought today for 4 closed
> at 22 - I'm worried about losing premuim??
>
> Dick
Dick I agree with you given the past couple days circumstances. My
trades come from researching over 600 stocks and indices, and I only
trade on major breaks. Sometimes it can take time for the position to
actually move in my direction. If it does, I will want to hold the
position during a good run, which can be over a few weeks. Sometimes I
will get out after a few days, but rarely. Because I trade on what I
consider to major breakouts (upside or down) and I am patient doing my
research, the 5-20 instruments that I find from my research should make
strong moves and I need to capture most of the move.
Given that, if my time horizon does vary, depending on the technical
action, what would you suggest??? I will agree with you, I do not want
to worry about premium, I don't even want to know how to price an
option(although I do). I just want to long or short a stock/index and
have an option that mirrors the movement of that instrument.
P.S--you are right about the puts having good moves, but you closed out
yesterday, and if you go to my web site, my instructions are to hold and
put protective buy stops on. The market should (spus are now down 15 at
8:30 am) gap down again. It is important for me to use stops and let a
market make its course.
Regards,
MM
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