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I am surprised at the reluctance of people to utilize options. Unlike years
ago when special programs and data were necessary to obtain option information,
it is all easily available on the net. Take any option at the money or one
strike out of the money, divide it by the number of days till expiration and
you will most likely find a cost of $20 to $30 per day. Yes there are some
exceptions like the S&P. If you can't average better then $20 a day trading
beans, corn, the currencies, bonds and some others, you are in the wrong
occupation. Ira.
BrentinUtahsDixie wrote:
> Conrad,
>
> Although correct in a way you might be neglecting something important. To
> quote something I read in Futures Magazine a long while ago "Know thy
> volatility" is a critical part of trading options. Buying options just
> because they are cheap is often a bad idea and yes you can be fooled into
> complacency. But when price, implied volatility, and timing are right there
> are bargains to be had. Naked calls and puts can expose you to the same
> risks as any naked position. Again this is too complex a subject to fully
> explore here in depth although if carefully chosen we could dissect it and
> do it some justice.
>
> Brent
>
> ***************************************************************************
> >A long futures protected by a put is very similar to just buying a
> >call. Granted you can get into some reversing strategies like getting
> >rid of the futures and keeping the put, but now we have changed the
> >"futures without a stop" scenario into a reversal plan. My own
> >preference if I dont like the risk or position size of a futures, is to
> >just buy a put or call.
> >
> >My inexperienced belief is that options are worthwhile precisely for the
> >"unlimited potential/limited risk" reason and the fact you can take
> >smaller positions/risks more appropriate to small accounts. However,
> >you do pay a price for this in terms of time decay.
> >
> >It's my belief that by being willing to get rid of options fairly
> >quickly if they are not working, I eliminate some of the time decay
> >cost. If I am still in the option after a long time, then presumably
> >the mkt has moved in my favor and more of the value of the option is
> >intrinsic, not time. The catch would be if the mkt. stays fairly flat;
> >i might not stop myself out of the option since I watch the futures, and
> >the opt. could decay. Like any strategy I believe a money management
> >plan that complements the strategy is the key to its success.
> >
> >Since I run a mental stop in the futures for the option position, for me
> >the option alternative does not eliminate the stop problem at all.
> >Rather, the option is just a sizing tool for my tiny account.
> >
> >Currently my tiny account has 1 Jun CD 68 call and 1 Jun US 128 call. I
> >did not follow my liquidation plan for the bond option. It's easy to be
> >careless with options bec. you don't feel you have unlimited risk, but
> >controlling losses is just as important.
> >
> >Feedback welcome.
> >
> >Conrad Bowers
> >
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