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Trading Options
 

I'm wondering if anyone out there, has gotten their feet wet trading options. I went to a presentation this afternoon, and it seems like the way to go!

You can make money regardless of the economy, whether the market is going up or down or even sideways- sounds like a little more due diligence is involved.

My dad has been doing this for around 8 months, starting with 750.00 he is now up to over 18k in his trading acct.

There's a lot more to valuing options than most other assets. You can make money if the economy is going up or down- that's true, but when the economy is so volatile like now its really difficult to get an idea of what the option is worth especially if its out of the money and it doesnt expire for months. The volatility of the underlying commodity/share is the only thing you cannot measure with certainty so that's how you make the money- being able to predict it better than others. There will be a lot of luck involved in times like this, but if you are not short selling with leverage the risk is limited. Sounds like your Dad is doing well- you know what his trading strategies are?

First, any presentation that says you can make money regardless of the economy is not being 100% accurate. There is risk in everything. If you could make money regardless of the economy, people like Warren Buffet and T. Boone Pickens would not be on all the talk shows explaining there exorbitant looses.

Listen to boondoggle. He is 100% correct!

My dad uses what is called the 'straddle technique. This involves purchasing both Puts and Calls for the same stock; as a stocks rises in value, the value of the PUT rises faster than the demise of the Call, the reverse holds true as well.-I dunno- it's not an easy thing to do, but he has done pretty well just "playing".

I'm doing some research; sounds like an interesting method of making some extra cash.

That kind of strategy is what you would expect to make money when the economy is like this- long straddles are designed for unpredictable markets, they are not difficult to put together, in fact they probably the most simple strategy other than trading direction with a straightforward put or call. There are some good books out there for forecasting and testing your strategies on unseen data, you can do it all on excel- it makes things much easier to understand when you can see the graphs of the strategy payoffs, its worth the effort to learn how to do them with excel/vba.

I'm not that advanced with stocks yet.. I just discovered trailing stops earlier today that saved me a few hundred dollars.

I got out of BAC from a 3.99 average at 5.10 with a .30 trailing stop.

I'll probably buy back in low 4s or high 3s..

Ｉｓ　ｉｔ　ｔｏｏ　ｌａｔｅ　ｔｏ　ｂｕｙ　ｆｉｎａｎｃｉａｌｓ　ｎｏｗ？　　Ａｎｙ　ｒｅｃｏｍｍｅ ｎｄａｔｉｏｎｓ？

Wait until it goes back down.. it's too high right now.

Fact: 90% of all options expire worthless. I believe like Aspkin, wait for another test of 6500 or lower for the dow. The summer is coming and traders go on vacation so nothing real will happen in the sense of a true direction. Just buy shares and be done with it!

I'm buying back slowly... BAC is went to high 10s today.. I'll probably buy more tomorrow.. it could go back to 9s or 8s before its settles at 12ish for awhile.

My partners and I ran a trading company between 1999 and 2001. We all traded for at least 10 years prior to that. After 9/11 we walked away. We had about 30 traders trading for us.

I wish to just say one thing about trading.

It's not different than anything else in business. You do your homework, dedicate yourself and maybe you have a chance.

Still 95% of you will lose. Not hypothetical, but actual data.

Bottom line?
It's not easy as it seems. To the OP's father - That's some fine trading!

Straddles, strangles, iron condors, butterflies, long vol, short vol, doesn't matter....thousand and one ways to make and lose money.

justmy2

Fact:85% of ALL fund managers either lose or can't break 3% on an annual bases. You think you know of people doing the naughty, those guys are the pinacle of "legit" scam artists. Except for our government...