June 3, 2013 at 4:03 pm

Avatar of moderatorval
Forum_Admin
Joined: May. 30, 2013 Posts: 54

I think one of the biggest mistakes we see traders make is thinking that cheap options are less risky and, therefore, allocating more money to cheap options thinking, “Well, I’ve got less to lose because it’s so cheap.”

In reality, the cheaper an option is, likely the further out of the money it is, so it’s inherently more risky. Now, as Ken Trester will tell you, cheap is better – but just be sure you’re not over-investing in low-priced trades.

Tell us about your cheapest option buy. Ever try to scoop up an expiration-day options bargain? How did it work out for you?

“Everyone must choose two pains: The pain of discipline, or the pain of regret.” Jim Rohn

June 3, 2013 at 5:13 pm

Avatar of amagnifico
Trader
Joined: Jun. 3, 2013 Posts: 13

I guess it depends on the option right? I mean if you bought Ford June $15 calls a couple weeks ago for $0.30, you could have made a quick 50% in like two days…but if you bought the CROC March $14 puts for $0.50, you lost 64% from Feb. 14-21.

Maybe it depends on the underlying stock — if they’re one of the biggest and best companies in the world…or one that just makes terrible shoes :)

June 5, 2013 at 3:18 pm

Avatar of moderatorcarla
Forum_Admin
Joined: May. 30, 2013 Posts: 18

Yep…just like anything else, there’s bargains and there’s cheap.

Trader’s Talk Moderator Account

June 22, 2013 at 3:07 pm

Avatar of buzz339
Trader
Joined: Jun. 22, 2013 Posts: 9

There is a trader I know who uses weekly options. He has a strategy that I have not seen anywhere else. He dynamically creates option combinations (butterflys, condors, half-wing condors, and others without any defined name) as the price of the stock changes, on an intraday basis. He focuses on just a few large names (AAPL, GOOG, NFLX) that he as a very good feel for their movement.

Lets just say this – he is very consistent and has earned more in a week than my yearly salary.

This is a very intriguing strategy, but it is not easy, and you have to be able to watch the market all day.

Buzz339

June 22, 2013 at 3:41 pm

Avatar of repeal16
Trader
Joined: Jun. 22, 2013 Posts: 3

I’ve traded some weekly options, but they are more time consuming than monthly options since it’s continuous research for those of us who are not day traders. Even with my simple buy and sell single puts or calls, it takes a lot of time. But there is money to be made.

You must be logged in to reply to this topic.

Back to Top