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In a message dated 97-12-31 12:01:07 EST, deanbush@xxxxxxxxxxxxxx writes:
<< Before hand, I know that a lot of variables come into play regarding the
"right" price for purchasing options, but in general would all of you
recommend buying calls and puts that are (1) slightly out of the money, (2)
at the money, or (3) slight in the money? >>
Hi Dean,
Rather than setteling on one hard and fast rule, you should try to
buy under valued options when they exist, and they do often exist. Lawrence
McMillan explains this in his book "Options as a Strategis Investment" or you
can down load a realy massive daily spread sheet (in Excell) that calculates
the value of ALL liquid options from Value Line for a fee at www.valueline.com
The value may only be a fraction, but every 1/8 gives you an
advantage, and sometimes the "discount" can be quite large. Even if you can't
find an undervalued option, you will feel more comfortable knowing that you
are not buying an OVER VALUED option!
Good luck and good trading,
Ray Raffurty
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