Buying OOM Options naked

[Hotch]

Does anybody here buy options this way? As opposed to using them in various strategies or to hedge?

In my usual approach, I've jumped in the deep end and just started to trade them today, really just as a substitute to trading the underlying really. Get a bit of experience while brushing up for a few things I'm looking into.

Hotch

 

[Martinghoul]

If they be cheap, I buy 'em all day, naked as you like.

 

[DionysusToast]

How far OOM are we talking ?

 

[Hotch]

Far enough that it's cheap, not so far that it's not gonna get hit

 

[HowardCohodas]

I may trade options naked, but I never trade naked options.

 

[Hotch]

Honestly Howard, it's always you lowering the tone, this forum is serious business don't you know!

 

[rharmelink]

Naked really isn't a concept to apply to buying options. When buying an option, you can't lose more than you've invested in the option. But if you sell an option, you are exposed to further losses -- unless those potential losses are covered by something, they are naked.

 

[HowardCohodas]

Honestly Howard, it's always you lowering the tone, this forum is serious business don't you know!

Busted, big time.

 

[HowardCohodas]

Naked really isn't a concept to apply to buying options.

You are quite right. Buying an option gives you a right. You can lose what you paid for that right, but no more. Selling an option commits you to an obligation. That obligation can get out of hand in a very big way.

 

[Hotch]

Naked probably wasn't the right word true, I mean buying options just on their own, as opposed to using the options to hedge something else which I see plenty of.