October 6, 2008

Does anyone here trade stock options?

trading puts calls
velious asked:


I’m looking into trading options after earnings. Right now just simple calls/puts..nothing complex, but does anyone else do this as well? what is your strategy..or at least part of it.. please IM me on aim (tradc7).

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October 8, 2008

Michael M @ 3:10 pm

You know I don’t think options are going to give you any particular advantage unless you really, really understand them.

To see if you would be able to understand, read through a few pages of “Dynamic Hedging” by Nassim Taleb.

If you don’t understand those pages, then I don’t think you’re going to have any greater or lesser success trading options than you do trading anything else.

October 10, 2008

zman492 @ 5:52 pm

I do some trading of stock options.

I try not to specialize in any one strategy, but to pick the strategy that appears most appropriate for the situation. However, I probably trade more put ratio speads than any other strategy. I also would say I find that spreads I keep delta-neutral are my most successful.

You need to understand that option trading is much more about volatility than the direction the stock price is going to move. Sheldon Natenberg, in his book “Option Volatility & Pricing” includes an appendix titled “What’s the Right Strategy?” in which he says if implied volatility is moderate the best strategies are

o Buy the stock if you are bullish
o Sell the stock if you are bearish
o Go on vacation if you are neither bullish or bearish

but don’t trade options unless you believe implied volatility is either too high or too low.

I strongly urge you to read at least one or two good books on options before you start trading them.

Here are links to message board threads where I have shared some of my options trades.

October 11, 2008

Nathan @ 9:26 am

This question is beyond the scope of this forum.

Start by learning a lot about the stock market first. Buy books on Amazon about options that have high user reviews.

October 12, 2008

92393 @ 5:33 am

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