Addendum...
I don't think it's the optimum way to trade options, I prefer spreading.
hi warezwana
just wondering what you are refering to when you say you are virtual trading
have you opened an account with a broker and are doing paper trades only
or is your virtual trading somehow linked to the optionetics course
if the virtual trading is linked to the course i would expect that there would be a bias towards the platform showing consistent profit imo
This is encouraging coming from you Wayne.. Good to hear!Howdy folks, thought I'd stop by for a chat
Right! Whether you can trade options strictly buying calls and puts. Of course you can.
Whether or not it works better than trading shares can only be determined after the fact and will vary from trader to trader. If I'm going for a straight out swing trade, most of the time I'll just trade the shares, going for the options when I think it will enhance things.
As with everything, I see in terms of greek risks/rewards plus a couple of other things. Here are what I consider.
When buying straight out options we are buying delta and gamma. So if you normally buy in 1000 share lots, your delta exposure, if long, is 1000 deltas.
To get the same delta exposure you have to buy more options. To get 1000 deltas with an ATM option, you have to buy 2000 options (2 x ozzie contracts). This exposes you to other risks and potential rewards.
1/ Contest risk - because of the wider spreads in most options, and possibly higher transaction costs (depending on broker), the options will have higher contest risk. That means if you buy the option and immediately sell it with no move in the underlying, it is going to be a much costlier exercise than straight out shares. Advantage shares.
2/ Gamma - This work in your favour with the option. If the trade moves strongly in your favour, gamma is going to get you even longer if your in calls (ie your delta will increase) and even shorter if your in puts(-delta will increase). Likewise if the trade moves against you, gamma will make you less long and less short (delta and -delta reduces). - Advantage options.
3/ Time decay - Long options are a depreciating asset. The longer you hold, the more that extrinsic value fades away. - Advantage shares.
4/ Vega risk - Changes in implied volatility will add or subtract extrinsic value from your options. If you're long options, you are also long vega, ergo, long on volatility. - Advantage... depends.
These above considerations should also be taken into account when selecting which strike and expiry. There are a lot more decisions to make if you are trading the options that don't apply when trading shares.
Some boohoo the greeks when swing trading options, but I still think you should know them; at the very least you will know how you got screwed... or where that windfall came from... and whether the option is the better vehicle than the shares, or visa versa.
Howdy folks, thought I'd stop by for a chat (A few PMs piled up in my inbox... I will catch up with those)
There are a lot more decisions to make if you are trading the options that don't apply when trading shares.
Some boohoo the greeks when swing trading options, but I still think you should know them; at the very least you will know how you got screwed... or where that windfall came from... and whether the option is the better vehicle than the shares, or visa versa.
Feels good doesn't itGood luck with it all...
Are you plannning on doing their course?
Thanks for that I'll check it out...
Not a chance. I'd much prefer to spend my money on books. I'm only going because the seminar is 500m from my front door
Addendum...
I don't think it's the optimum way to trade options, I prefer spreading.
Smart, smart move... off to a sensible start
BTW, how's it been going for the last week?
I'm stuck with some BHP that I'm going to take a bath on, but have some CBA that should offset it.
for swing trading, long call/puts have more advantage over shares or cfds.
it could turn out to be a bruising affair, i.e. if the market swings hard the MM's may pull their quotes while they assess the situation.
Hi warezwana
Later on I started getting better at the tech/fundamental analysis, which definitely boosted the profits.
Whether it is luck or not, maybe you do have a niche for the current volatile patterns in the markets that are happening now (in theory maybe it is a beginner's luck season?). Though as pointed out there are many seasons in the market, and it may soon change. (Maybe start of new financial year?). Different seasons means different results.
Hey Guys,
Just wanted to add my 2 cents.
Firstly and generally, if it ain't broke, don't fix it. In other words, if what you are doing is working for you and you are happy with the profits, stick with it.
That said, there is another nice saying: don't confuse brains with a bull market. I've done that and lost. I'd had 20 successful trades in a row, not a single loss. I made 50k in 1.5 months and I thought I was god. Then I lost it all in 3 weeks because I'd come to believe that I couldn't miss. One thing is certain when trading: the market ALWAYS turns and changes. You have to know what you'll do in any unexpected situations, because they tend to occur often.
Long story short, keep doing what you are doing, but apply stringent money management and discipline (cut those losses short), always. And you should be fine.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?