Greg- Options are like a CHAINSAW.
They are a very powerful tool. Cuts very fast, can cut your legs off.
Very dangerous if you don't know what you are doing, and respect the nasty end.
I think I have done very well by selling calls. In effect, I enforce a discipline that I will sell a stock at a certain price, and I get paid to make that commitment.
It's my best "anti-greed" tool, so far.
Another situation is selling puts to go bottom fishing- make money by simply writing a contract that you will buy MSFT at $70, if you ever got a shot at that price again.
I also started trading minor, minor positions in options to learn how the tool works. I agree the spreads are killer and the liquidity is low. Buying calls is not usually the way to go, IMO. However, when you just KNOW Apple is going to run up EVERY YEAR before Macworld in mid July... This year I bought stock, instead of options. Because, as you say, timing is everything.
Cramer is saying the AAPL specialist may have sold too many calls, and if that's true, there could be a scramble to buy enough shares to cover the contracts by Friday. In other words, somebody else was buying, expecting good earnings and Macworld to be a sure-fire springboard.
I am a big fan of McMillan's book.
Web
( an options novice, but have made a little money and learned how to use the tools by trading very small positions. When I need the tool, I'll know how to use 'em) |
