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Hi RTs,
Thanks for all of you who responded to my option question!
I was very poor at placing stops when I started trading in 1995.
Sometimes, my buy stops got filled at the daily high and my sell stops
got filled at the daily low. As I gained experience, I am improving my
skill.
I avoid placing stops 3 or 4 ticks above previous day's high or below
previous day's low. But the problem is not completely solved. Today,
my stop loss order (buy stop) was touched (Cotton, CTZ9) at 5630, which
is today's high. I felt flattered and sad at the same time. Look at
today's high, I know it was me, my stop order being touched. Without my
stop, today's price history might be different. I feel like a genius
who can forecast the daily high but unfortunately in a wrong way. I
feel very bad. I guess my experience is rare because it is very
difficult to get filled right at daily high or right at daily low.
Maybe option is my only saviour.
Mervin
cb wrote:
> A lot of futures options only trades a few (as in say 5) times per day.
> I would assume not necessarily at the close. (As I understand it,
> placing a market order essentially forces your floor broker to offer
> higher and higher; if nobody at all really wants to sell that option at
> that particular time, you might get a very unpleasant result.)
>
> I would place a limit order based on the previous days settlement. One
> idea would be to place a limit order a couple tics above the settlement
> to be more sure of getting a fill. A refinement would be plug in the
> settlement price and futures price into a spreadsheet, and then at the
> open the next day, plug in that price for the futures price and use the
> new option price as the limit. If you don't have a sprdsheet you could
> accomplish essentially the same thing by looking up the delta of the
> option on the net (for example at, http://216.71.81.240/inewf.htm ), and
> using (futuresopen-close) x delta to get the adjustment for your price.
>
> I have a tiny acct. and have traded some fairly illiquid options. I use
> the settlement price on commodities that dont trade overnight, and i use
> the overnight session close on currencies, metals (and interest
> rates?).
>
> I do forsee a problem using options as stops. Presumably, once you are
> in the futures, you want the option, and would not be happy if you don't
> get a fill; yet this may happen. Maybe the risk of being unprotected,
> would make a market order warrented, but you could incur some
> significant slippage, particularly relative to the price of the option
> (a 20 pt. slippage is probably going to *seem* a lot worse on a 100 pt
> option than it would in the futures).
>
> A futures with a put instead of a stop is a lot like a call. Why not
> just buy a call?
>
> Conrad Bowers
> a relatively new trader who has traded perhaps 30-40 or so options in
> the last 3 yrs., most of them fairly illiquid.
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