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In a message dated 10/11/99 1:13:50 AM Eastern Daylight Time, heicz@xxxxxxxxx
writes:
<< Buying options instead of the underlying asset(UA) makes some sense to me
but I worry about volatility and time decay. The idea of writing options
doesn't agree with me either, and spreads sound as though they may be
difficult to enter and if the strike price at the end of the trade is far
different than the strikes that I entered the option spread at the market
may be illiquid. The idea of buying options still makes the most sense to
me(I know; sell don't buy options) as my trading system is somewhat long
term. This is why I don't always want to enter a futures contract; the risk
is usually too great. So if I trade for the long term(a few weeks or maybe
3 months) perhaps volatility and time decay don't matter as much as if I
were trading for the short term; a few days?
Another reason that I like the idea of buying options is that they can be
excercised. This is important if the market is illiquid. Writing options
has no such provision.
>>
hi
on the next big down day , Buy long term options 2001 etc
then while waiting for price to go up on the stocks sell the higher
strike price
example
aol 75 2001 calls and sell dec/99 120 calls
hope this heps
Ben
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