Since dow is down about 2500 in the last 8 months or whatever its been wouldnt it be a good idea to put in a large buy for it right now since there is a very good chance that it will return to where it was eventually.
DislikedSince dow is down about 2500 in the last 8 months or whatever its been wouldnt it be a good idea to put in a large buy for it right now since there is a very good chance that it will return to where it was eventually.Ignored
Dislikedgoing long the dow using options would be silly, raygun, because uness you buy stuff that expires in a few years they will most likely expire worthless.
if you were to go long equities now i'd do it with a small non leveraged position that i am ready to keep for up to 6 years or so..Ignored
DislikedOn the long term time frame, yes. My concern tho was when I checked the option prices, the strike price already had a high implied volatility.Ignored
DislikedYou don't buy long, you buy straddles.Ignored
If price goes to: $105
To me, I need to find a straddle which costs less than $500. If the price to open the straddle is less than $500, then I'll buy it.
Any suggestions for improvement?
DislikedClearly you know far more about options trading than I do gammase1.
I just calculate the profit I get when the price moves 5% away from the strike price, and I buy straddles which cost less than that profit.
Strike Price: $100.
For one contract...
If price goes to: $95.
- Call Profit: 0
- Put Profit: $500
If price goes to: $105
- Call Profit: $500
- Put Profit: 0
To me, I need to find a straddle which costs less than $500. If the price to open the straddle is less than $500, then I'll buy it....Ignored
All of those industries were in the news and very strong news events at one point or another. I have yet to have a losing straddle. But, I've only done 50 straddles thus far. Hardly a large enough sample size.
I agree that straddles which meet my criteria are difficult to find, but it's the exact same way with forex or any straight trading. The perfect entry point in forex is pretty rare, just as the perfect entry point in the stock options market is hard to come by.
I get the quotes in excel every 10 mins for stocks I'm watching with maturities between 12 and 18 months. After the market closes, I look at the news, any trends, historical volatility, and the cost of the straddle. If I think the price of the stock will move at least 5% within the maturity period, I'll buy. I usually get one signal every 3-4 days. So this isn't something which happens too often. But it makes a very good return.
DislikedI'm not trading Forex Options. I'm doing stock options. It's really the only way I can trade the stock market without using a bloomberg terminal. And even with a bloomberg terminal, I still have trouble making money on the stock market.
I'm looking at a maturity at least one year.
My thinking is that--since these are american-style options as opposed to European and Bermudan style options--the price should move at least 5% away from the strike price at least once in that period. I also increase my chances of hitting a winner by placing straddles...Ignored