Equity Options
 

Any options traders out there? Just wondering if anyone has found any particular strategies they like. I have only bought call options. I have not taken on more sophisticated methods like straddles or such yet.

I trade options. Mostly buying calls and puts but I do some spreads as well. I mostly trade option on ETFs but I do some individual stocks as well. I'm bummed my GOOG ride is coming to an end (Nov expiration). I have calls that I bought when it was at about 580. :)

Although I learned on CG that it's "impossible" to beat the market so I guess it's all an exercise in futility. :)

I don't think it is impossible to beat the market (that would be dumb), but I do think beating the market has a lot more to do with luck than anything else for publicly traded securities.

In the long run, it is impossible to beat the market. Anyone can make out like bandits in the short run.

Most option traders lose their butts. 99% (my guess) of those who have regular jobs and trade options really lose their butts.

As far as these guys who sell their strategies, well if they were so damn good they wouldn't have to sell their strategies would they?

Whenever someone brags how much they make in trading options, I just ask to see a copy of their Schedule D for the last 3 years. That usually shuts them up.

LOL!

Which should I regret more?

The GOOG calls I'm in and up 280% or the QQQQ credit spread I'm in that was a 55/45 risk/reward (i.e. for every $55 I put at risk, I get $45)?

It's easy to beat the market. You have a 50% chance with every move you make.

I have buddies that win everytime they go to Vegas. At least I think they do because every Vegas story they tell me about they won.

Imagine a scenario where you took 1 million monkeys and asked them to throw a dart at the stocks listed in the Wall Street Journal. At the end of the process, some darts would have hit good stocks, and some bad. Repeat that process 50 times. At the end you would have some monkeys who hit good stocks 50 times (the smart monkeys) and some who hit bad stocks all 50 times (the dumb monkeys).

I think this is pretty close to how it works for publicly traded securities (unless you have insider information, which would be illegal to use, or if you have so much cache in the market that the market tends to follow what you do, thereby ratifying every decision you make, like Buffet).

Right, what are we thinking?

Nonsense. It is not impossible.

best options
 

best options I've been in over and over again are,,,,,real estate options and hold for long term!!!!

Which brokerage do you use? I've been looking at Zecco lately, but haven't yet committed anything to an account there. Has anyone gone through them?

Never heard of them. For small accounts, I think OptionsExpress is good. For serious traders, it's hard to beat TradeStation. Lots of people like ThinkOrSwim as well. The latter 2 are both direct access brokers. If you don't know what that is, you don't need it. :)

OK, maybe a couple of you are great option traders. So let's have a little game here. For the next two months let us know what option trades you make, in advance. I will keep my money in cash.

I will bet a really nice dinner for you and your significant other that my cash beats your option trades. If I win you don't have to give me a thing, that is how sure I am you lose.

OK, I just sold my RIMM call options for 50% gain in ten days.

You're on. Currently open positions:

AAPL Jan 200 Call. Bought at 10.45
AAPL Jan 190 Call. Bought at 13.30
GOOG Jan 650 Call. Bought at 53.00

I have about a half a dozen credit spreads as well. Are you interested in those or just long/short positions as above.

Are those Jan '09 or '10 calls? I'm assuming '09, but either way, nice work.

this coming January .. so 2008.

I admire your nuts for putting out what you have. They closed at 10.65 14.80 and 82.60 on Friday. Let me know when you close out your positions. You can board-mail me. I am not trying to prove you right or wrong in front of people, just curious to see how things would work out if I were follwing your advice.

Great. Let us know the next option you buy and we will see if you can keep it up.

Kudos to you.

http://www.museumtrail.org/images/Cr...letteWheel.jpg

Post the results for all of us to see, make it fun for all of us.

FM Coug, I don't doubt your success one bit, but am curious if you've been tracking your success -- what's been your ratio of successful trades to losses? and for how long?

My guess 95% of people who trade options lose money over the long run. That leaves the 5% of which FM and Nor Cal belong.

Just bought some YHOO Jan 30 Calls at 4.10

If they really are in that 5%, I'm curious what their ROI is. Is it high enough to reward the higher risk?

OK, someone now would have to pay 4.25. You could sell yours though for $4.15. Congrats, you are already up a nickel. :)

I've only been trading real money doing this since March ... so it's way too early to tell what the long run looks like. That said, the account in question is up about 40% in that time frame. So for me, it's worth it. But there is no question this is a high risk / high reward strategy. It's not something I would put a hight % of my net worth into, etc. It has to be done with pure risk capital.

For what it is worth, I think your timing right now is pretty good. The market feels oversold. However, I personally wouldn't put any short term money on it. I am too old to play that short term game anymore. I am buying a few things now, but I don't plan on selling them for 3-5 years.

Why not buy the Jan '09s? Wouldn't that be a much lower risk than buying the Jan '08s like you did?

Less risk, less return.

I will post them here to keep 71 honest about buying me dinner. :)

Regarding win/loss ratio, I do track that but it's a small part of the picture. The idea is to let winners run and cut losses. So the size of the wins vs. the size of the losses is a bigger component of success. Also, due to the risk involved, I only trade a small % of the total value of the account, keeping the rest in cash. So even the % gain/loss on individual trades can be misleading. That's why to me, what really matters is the ROI on the account balance over time.

LEAPs are a very different strategy than I employ. They are great for long-term option investing ... but the time value is killer. Not something you want to "trade". It' much more of a buy and hold strategy at that point. And yes, it would be much lower risk.

Thanks for sharing.

My diversified 401k has yielded 25% over the last year.

So you have accomplished the impossible then? Kudos.

I guess since we are all confessing here. The clients I have advised over the last 25 years have compounded at 78.735% per year. That is why I can spend all this time posting and not worry any of them will go somewhere else.

78% a year over 25 years? You taking new clients?