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List of companies in the options market

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Sorry to interupt this thread. Just stopped by to oggle Mazzas avatar.

.. as you were.
 
mazzatelli said:
Do you know what happens to the value of your long call after a day, if the underlying hasn't moved at all and why this is so?
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Starcraftmazter said:
Are you referring to the time premium of options?
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Starcraftmazter said:
Then I would guess that is the reason yes.
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You guess?
BTW, I asked what happens to the value of the call, you have just guessed time premium.

Can you elaborate further if/how time premium affects the call option in the scenario I have outlined above? Are there other effects aside from what you have mentioned?

Grinder said:
Sorry to interrupt this thread. Just stopped by to ogle Mazzas avatar.
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Hey G, long time no see. Hope all is well, iirc you are a father now. Congrats!
As you know with my av's, I always aim to please
 
Why specifically call? Calls and puts are the same as being affected by time premium aren't they? What I meant was that they go down in value as they close in on the expiration date due to loss of time in which they can become more valuable, etc.

I'm not aware of anything else that can affect their intrinsic value if the market stays flat, just like I'm not aware of why you are quizzing me on this.
 

Don't you mean 'extrinsic' value?

You should do some more research.
 
Starcraftmazter said:
Why specifically call? Calls and puts are the same as being affected by time premium aren't they?
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I don't know, are they?

What I meant was that they go down in value as they close in on the expiration date due to loss of time in which they can become more valuable, etc.
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Great, so this is one of the non-linear aspects wayneL alludes to.
My question is then why
1) go long options when its value changes in response to the underlying but has time ticking against you (among other things??)
2) instead of futures whose value changes in response to the underlying as well, but you don't incur this "penalty"?

And paying a "capped premium" for the call option (is this the same for put options??) is not an advantage over futures

I'm not aware of anything else that can affect their intrinsic value if the market stays flat, just like I'm not aware of why you are quizzing me on this.
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Well not intrinsic value, but to the other component of an option there is something where it's net effect is detrimental to your position, on top of declining time value.
 
wayneL said:
Don't you mean 'extrinsic' value?

You should do some more research.
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All in good time, there are only so many hours in a day.



Honestly, you probably give me too much credit wondering why I've chosen one over the other. All that happened is that my broker (finally) rolled out the ETO trading functionality on their website last month, and I thought I'd give it a go. It's worked out pretty well so far!!

If you would like to suggest somewhere where I can trade futures instead, by all means let me know. But honestly, with asx200 options, when the market moves even 0.1% in the direction you bet, the massive amount of profit seems to outweigh everything else - so I have never noticed a decline in the value of the options I'm holding since the profits are very large in terms of ROI.

Granted I understand that you are saying one such as myself could be making equally as much and more in futures (is that what you are saying?), however I have done this for so little time that I have really not given it much thought - indeed most of my time is taken up by trying to predict market direction so as to not lose money just earned. I'm quite thrilled to be getting these sorts of profits quite frankly to want to change to something else so soon after trying this. Perhaps give it some time for it to wear off.


Also, do futures not have a time premium either? Don't they have an expiration date as well?

Ie. take this for instance:
http://www.forexpros.com/indices/australia-200-futures

Says: S&P/ASX200 Index Futures CFDs Mar 12 Overview


Additionally, if futures are so superior to ETOs, then why does the latter exist and be actively traded in the first place?
 
Really? a 4pt move = massive p/l? Scalping futs you can take 4pts, but i really doubt 4 pts will even covers the bid/ask spread on oppies. Which oppie chain are u looking at.

Also, do futures not have a time premium either? Don't they have an expiration date as well?
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Cost of carry. Different from time prem, also XJO oppies are priced according to futs rather than cash till expiry date, so thats pretty much moot.

Futures expire, and u can roll them over a bit like oppies.


Just check the liquidity on the futs vs the oppies, actively traded is a very loose term. XJO Oppies are for ppl who as previously said, want non-linear payoffs, or arb against cash.
 
Starcraftmazter said:
Additionally, if futures are so superior to ETOs, then why does the latter exist and be actively traded in the first place?
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Grasshopper,

Futures are not superior to options; neither are options superior to futures. Each have their place in the complete trader's armory. Choosing the right weapon and defensive apparatus for the right battle is what is important.

IOW, never take a knife to a gunfight.

Options are a fine instrument and I recommend them highly in the right circumstance and market view, but (this is not meant to give offense) you have no idea with what you are playing with, otherwise you would not have asked this question.
 
Starcraftmazter said:
So overall, what is your point?
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skyQuake said:
And you can just as easily lose 80% every day for a week
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Starcraftmazter said:
Only if you are really really dumb. And have some problem pulling out of a clearly bad position.
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It comes back to the whole point of ASF, to deliver quality information and discussion on markets.

I'm happy to let you blow yourself up; in fact it might be just what you 'need', but the point is that on a public forum, there are readers who might get something out of the discussion.

There are various clowns and buffoons who promote erroneous information on options. Some pitch it to the ignorant for large sums of money, some because they are ignorant themselves.

Some feel a responsibility to call them out and give better information.

In conclusion, contributors to this thread are hoping others 'see' the point, even if you don't.
 
wayneL said:
There are various clowns and buffoons who promote erroneous information on options. Some pitch it to the ignorant for large sums of money, some because they are ignorant themselves.
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Anecdote: Enough digging in option archives in ASF, has a poster who came in and said it was "easy" (selling otm gamma, promoting positions that were essentially synthetic longs), didn't care for any risks presented to him/her, only to subsequently blow up.

Then there is always the Bill Stacy thread...
 
Sure there's always risks, but that's nothing to do with options...it doesn't really matter what instrument you use - if you predict the direction incorrectly, you will lose money. The quantity of money should be clear to everyone who trades said instrument - this is no secret at all.

Overall, sure is captain obvious in here.
 

Oh really?

  • With options you can get the direction right and still lose
  • You can get the direction wrong and still win
  • You can use options to profit from a strong move in any direction
  • You can use options to profit from sideways movement
  • You can use options to profit from changes in volatility, irrespective of movement
  • You can use options to lock up the underlying's price long enough for CGT considerations
  • You can use options for arbitrage
  • You can use options to scalp gamma
  • You can use options to collect premium

...and probably a bunch of stuff I can't remember off the top of my head.

Yes picking direction too. But doing so without regard to the non linear aspects is not too bright.

You are fond of referring to others as 'stupid', yet in your attempts to not look stupid yourself... well, let's just say even Lao Tzu would be amused.
 
wayneL said:
You are fond of referring to others as 'stupid', yet in your attempts to not look stupid yourself... well, let's just say even Lao Tzu would be amused.
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Not at all, however it is not a stretch to say that if you predict the market will rise or fall - but it goes something like 3 percent in the opposite direction, and you don't sell so you lose more money....then that's somewhat silly.

I'm also talking about exclusively about trading ETOs, as I've already mentioned half a dozen times.
 
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