There are lots of books on the subject of Options and your best bet is to visit the Investors Chronicle bookshop online. www.global-investor.com/books
MIKE_SHELDRAKE
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Hey Guys, I used to trade spreadbetting but was disappointed with the spreads although I am now considering trading that alongside Options trading mainly because the spreads have come down. I traded the FTSE but to be honest, I was very luckt to make 150 pounds on a good day however I am now trading the DOW very frequently because of the large volatility - it can move 200 points in a matter of days! However spreadbetting is good for intra-day trading and I urge you guys to look into options. I am a beginner to this after recently attending a 2-day course - the course taught useful strategies and I have made some great returns! The great thing about Options is the low-risk\k nature - you dont have to worry about the markets moving against you and hence use Stops because what I pay for the trade is the max. I can lose - in some cases, this can be as little as 200 pouinds! I am trying to see whether I can still use spreadbetting as well as I have still a lot of experience in this but Options seems to be much better!
MIKE_SHELDRAKE said:
For Heaven's sake, you guys, be careful with options. I used to trade them before I went into futures. It is my opinion that buying call options is one of the easiest ways to lose a lot of money. Don't let the "you can only lose what you put in" term fool you. The fact is, that most people ALWAYS sell at a loss and a few contracts amounts to a lot of money.
What you have to remember is to buy them and sell them before the time ( which is where a lot of the premium is paid for) starts to waste away. Once that wastage sets in, the market can send the price of the shares up and the option holder can still be nursing a loss or, at best, be breaking even because the option value is falling regardless. If I remember rightly, the right time to have call options to minimise wastage is well into the future of it, say more than two months and the last ten days before expiry. Anytime in between is where there is the most wastage and where the writers make the most money. Taking all that as digested I would add that you should have a good opinion that the share is going to go up and just buy the call. Don't be tempted into straddles and calender spreads unless you have a lot of money- like institutional buyers. The cost of these is a waste of money and limits your earning capacity (IMO)
The real earners of money in the traded options business are the covered writers. They hold the shares and are willing to sell them if they get called.
Books? I still have "Options-Trading Strategies that work by William F.Eng (Dearborn Financial Publishing) and John Piper has something to say about them in "The Way to Trade" (Pitman Press).
Good Luck
Split
Well said Splitlink, there is always a tendency for people to view options as a cheap way of trading financial markets. Unfortunately, it is exactly the opposite unless one knows how option pricing works, if not, it can become a financial graveyard.
It takes many yrs to learn the CORRECT WAY to trade Options.
I'm a full time Option trader. I mostly make my profits from writing Puts [covered]
I'm also a buyer of Call Options on Stock's [us/uk stocks] but rarely a buyer of Puts on stocks and never a seller of Call's either.
My advice to any newbies on Option's is: learn the GREEKS in option's, these are vitally important!! if ur knowledge is small on Theta/Delta's u should not be trading them at-all!!
When u buy Call's/Put's ur max loss is the prem's paid [limited loss with unlimited gains]
When u write Call's/Put's ur LOSS is UNLIMITED and ur MAX profit is LIMITED to the prem's taken.
Learn before u earn
Done the correct way, option's are by far better than SBetting
Option's are NOT dangerous IF DONE correctly! Those that say Option's are dangerous know very little on Option's Company directors buy them by the thousands and they dont know what a strangle/straddle positions are all about :cheesy:
Bull
I'm a full time Option trader. I mostly make my profits from writing Puts [covered]
I'm also a buyer of Call Options on Stock's [us/uk stocks] but rarely a buyer of Puts on stocks and never a seller of Call's either.
My advice to any newbies on Option's is: learn the GREEKS in option's, these are vitally important!! if ur knowledge is small on Theta/Delta's u should not be trading them at-all!!
When u buy Call's/Put's ur max loss is the prem's paid [limited loss with unlimited gains]
When u write Call's/Put's ur LOSS is UNLIMITED and ur MAX profit is LIMITED to the prem's taken.
Learn before u earn
Done the correct way, option's are by far better than SBetting
Option's are NOT dangerous IF DONE correctly! Those that say Option's are dangerous know very little on Option's
Company directors buy them by the thousands and they dont know what a strangle/straddle positions are all about :cheesy: Bull
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neil
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Options are dangerous because many hopefuls simply do not trade them correctly !!!
As Bull says - "Learn before you earn."
I paper traded with Redmayne and Bentley (Brokes) years ago before I went live. Did OK but now trade forex.
There are some good books out there as well.
As Bull says - "Learn before you earn."
I paper traded with Redmayne and Bentley (Brokes) years ago before I went live. Did OK but now trade forex.
There are some good books out there as well.
.
Bulldozer, the company directors' options are not the same ones as those traded in the options market.
Theirs are a form of buying (if they buy them in the first place) and obtaining the shares on the expiry date,which they can then sell at the current price or hold on to. They are not traded and, therefore, do not have a time wastage factor built in. That time premium is everything. Those who decide to go in remember
to pay close attention to that. There is nothing to prevent a share on results day- lets take RBS- going up in the morning (believe me, the writers will be pushing the premiums up for all they can get) and, a few weeks later the shares can be two pounds lower. The smell of burnt flesh can be noted all over the market.
I've said my piece on options trading. Now it's up to the traders and would be traders to make up their minds
We are the fuel that the options market needs to keep going. We, in turn, are fuelled by greed.
Nuff said, Good Luck
Split
Bulldozer, the company directors' options are not the same ones as those traded in the options market.
Theirs are a form of buying (if they buy them in the first place) and obtaining the shares on the expiry date,which they can then sell at the current price or hold on to. They are not traded and, therefore, do not have a time wastage factor built in. That time premium is everything. Those who decide to go in remember
to pay close attention to that. There is nothing to prevent a share on results day- lets take RBS- going up in the morning (believe me, the writers will be pushing the premiums up for all they can get) and, a few weeks later the shares can be two pounds lower. The smell of burnt flesh can be noted all over the market.
I've said my piece on options trading. Now it's up to the traders and would be traders to make up their minds
We are the fuel that the options market needs to keep going. We, in turn, are fuelled by greed.
Nuff said, Good Luck
Split
I have to admit, Options are much better than spreadbetting but I used to trade the FTSE 100 Index as a spreadbet and it wasnt great!
Trading volatile markets such as the Dow and DAX is a lot better (as well as U.S. shares!) and I am doing them through Options (U.S. only - Dax through Futures) and my returns on the DOw have been good!
I believe it may be a good idea to trade various instruments rather than just one!
Is anyone actively trading forex and if so, what methods work well?
Trading volatile markets such as the Dow and DAX is a lot better (as well as U.S. shares!) and I am doing them through Options (U.S. only - Dax through Futures) and my returns on the DOw have been good!
I believe it may be a good idea to trade various instruments rather than just one!
Is anyone actively trading forex and if so, what methods work well?
At the risk of asking an obvious question - aren't 'options' and 'spreadbetting' different categories. Options are an instrument, whereas I spreadbetting is basically a tax-free wrapper. You can after all trade options as a spread bet.dpate said:
I agree entirely that you it's a good idea to trade a variety of instruments. Just as you wouldn't use a sledgehammer to crack a nut, trying to day-trade options is likely to end in losses. The spreads are just too wide to job in and out of on low delta strikes.
Interesting reading about covered puts - I'd thought of them before - seems like a good idea to get paid interest on a short CFD and benefit from the theta decay. Anyone see any pitfalls in this?
Nick
Splitlink said:
Split,
I know what you mean its similar to Warrants.
I was referring also to traded options on US/UK companies [american style] there is nothing to stop directors/board members from buying Call's/Puts, and they are at a great advantage because they know the basics and they buy options ahead of any announcements. It may be ellegal but theres ways of doing things without getting caught by the FSA. In anycase the penalties may not be that severe. Mary Archer/ and her husband Jeff done something similar with Anglian Water a few yrs back.
The rewards far outwieghs the penalties! its worth the risk
To all you guys who don't think that there is enough money to be made spreadbetting the FTSE.
I'm ahead but, and I hate to agree with you, I'm a bit disappointed after all that work!. I was hoping to make something every day. AIas, such has not been the case, although I only trade in the mornings. I can't give up on my second week, though, can I? Especially as I have made profits on both weeks.
Split
I'm ahead but, and I hate to agree with you, I'm a bit disappointed after all that work!. I was hoping to make something every day. AIas, such has not been the case, although I only trade in the mornings. I can't give up on my second week, though, can I? Especially as I have made profits on both weeks.
Split
=================================================================LION63 said:
It proves that I'm not 110% correct :!:
But i got the Anglian part right
Brilliant week-end to all :!:
Bull
Stay sharp :!: stay alert :!: and stay ahead of the HERD :!: :cheesy: :cheesy: at all times
