Recommended books/resources on options trading?
es330td
years but have not taken the "next step" to buying and selling options
separate from equities I own. I bought a copy of "Optional Wealth"
which has been a great help in understanding how I can use multiple
options to hedge against risk and profit on spreads. It makes no
mention, however, of things like floors and ceilings and resistance
levels or breakout points. (I think I used these terms right.)
I had hoped that this group would be useful; unfortunately, it seems
to be overrun with get-rich-quick schemes (along with almost every
other USENET group.) I'd like to start to understand some of the
actual strategies people use. It would nice to see examples
situations wherein an investors looks at a stock and then makes a play
(short term or long term) with an explanation of why it was done and
what the outcome was.
I know that picking the actual stock is a person thing and everyone
differs; what I am trying to gain a knowledge of is if I look at a
particular company and have an opinion about future performance what
strategy (strangle, straddle, put, call, etc) might be profitable
given said opinion.
I am sure there are resources out there to learn this stuff. A
general search of Amazon turns up many, many books on Options but that
doesn't necessarily mean they are all good. If anyone can point me in
the right direction I would greatly appreciate it. If you want to
propose a system I ask you to not waste your time or mine. I'm
looking to learn about options trading in general, not read about how
I can get rich on $6 or be sent to some site on forex trading.
(Note: I live in Athens, GA, home of the University of Georgia with a
highly regarded business school and I have a BBA so I am not afraid of
going to the local college bookstore and picking up a college text if
that is warranted. I suspect, however, that even if I had a finance
degree I wouldn't have received the kind of knowledge for which I am
searching.)
arthur
try the optionetics forum
ivolatility site Knowledge Base pages
888options free options investigator CD
that will keep you busy.
options are a 3rd or even 4th dimensional problem not seen in equity
investing.
a
uncle_vito
will go up there is the call, down the put. Then there are selling short of
each for,again, whether you think the stock will go up or down. Selling
short options is not allowed by brokerages unless they are covered.
To reduce risk but also limit gain there are bull call spread, bear call
spread, bull put spreads, bear put spread. To better help pay for the
options there is the collar. If you think the stock may move alot but are
not sure of the direction, there is the straddle and strangle.
I used to just buy puts and calls. Writing covered calls was OK but rather
tame. I then went to bull call spreads and bear put spreads, which limited
my dollar loss but also my gain.
Stick with those 4 and you basically can do what most investors would want
to do.
Learn money management. Assume that all options you buy will go to max
loss. If you cannot tolerate that, then buy fewer options. I am carrying
losses from the Feb 27 drop in my March options. Come Friday, thoses losses
will all hit. Ouch. I pray to the option god that maybe they will get in
the money by Fri. Not likely.
Vito
"es330td" <es3...@gmail.com> wrote in message
news:1173735212....@v33g2000cwv.googlegroups.com...
Matthew Speed
<uncle_v...@yahoo.com> wrote:
>Those sites Arthur recommends are great. Basically if you think the stock
>will go up there is the call, down the put. Then there are selling short of
>each for,again, whether you think the stock will go up or down. Selling
>short options is not allowed by brokerages unless they are covered.
I found this site last night:
http://www.numa.com/derivs/ref/os-guide/os-0a.htm
It doesn't explain a lot of the terminology but it has been a great
help in wrapping my head around what actually happens as the price of
the underlying security moves. It looks pretty similar to
http://www.888options.com/strategy/strategy_index.jsp
>To reduce risk but also limit gain there are bull call spread, bear call
>spread, bull put spreads, bear put spread. To better help pay for the
>options there is the collar. If you think the stock may move alot but are
>not sure of the direction, there is the straddle and strangle.
>
>I used to just buy puts and calls. Writing covered calls was OK but rather
>tame. I then went to bull call spreads and bear put spreads, which limited
>my dollar loss but also my gain.
>
>Stick with those 4 and you basically can do what most investors would want
>to do.
>
>Learn money management. Assume that all options you buy will go to max
>loss.
I already assume this; this is one of the reasons that I am interested
in the combinations of options. It is VERY unlikely I will ever have
the stomach to sell a naked put or call, but the hedging aspect of
option by which an investor can set a floor on the loss is very
appealing to me. I realize that sometimes giving up downside risks
also puts a cap on possible return but I'm not trying to be greedy.
If I can learn enough to average between 1 and 2% per month I would be
pretty happy.
>If you cannot tolerate that, then buy fewer options. I am carrying
>losses from the Feb 27 drop in my March options. Come Friday, thoses losses
>will all hit. Ouch. I pray to the option god that maybe they will get in
>the money by Fri. Not likely.
>
I'll cross my fingers for you.
Thanks to everyone for their help.
arthur
<uncle_v...@yahoo.com> wrote:
>options there is the collar. If you think the stock may move alot but are
>not sure of the direction, there is the straddle and strangle.
Collar is a Conversion .... used by MM and arbs. Can be duplicated by
Spreads.
S&S are too risky. if long you are paying for the loser. won't even
discuss the short straddle strangle
>I used to just buy puts and calls. Writing covered calls was OK but rather
>tame.
CC = short Puts ( synthetic equivalence )
uncle_vito
had a heart to heart with myself and decided that I had too much loss
exposure with my March options. I added up the worse case losses and didn't
like what I saw. I wrote a strategy of which options possibly could be in
the money, which had no chance and which were mildly in the money but whose
fortune could change. Luck was with me on Monday since it was an UP day. I
lightened up about 33% on my options selling both moderate losers and
gainers for a realized gain/loss of about 0.
I feared further correction so I bought 5 put contracts on the S&P expiring
in 4 days for about $2500 total. That saved my bacon today. I closed out
that position with a $6000 gain and, of course, with the drop today, all of
my March calls will expire worthless. Many of the expensive calls were
spreads, so when those expire, I keep the premium.
I set up another S&P put spread for April expiration anticipating that the
S&P could get to 1360 before this correction is over with. Bought 10 ATM
(April 1380) puts at a total of $23000 and shorted 10 OTM (April 1370) puts
for a premium of $19,000. Total cash outlay was $4000. Max upside
potential is $10,000. My long puts have alread gone into the money about
$2.
Vito
"arthur" <trash.a...@xoxy.net> wrote in message
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