LESSONS AND COMMENTS
In my brief options investing career, I have already learned some good lessons:
1. Taking advantages of temporary dips may be even more important in buying options than in buying the common, cause the leverage makes it so.
2. Different options move at very different rates (duh, but fun to watch). For example, the Q moved up about 10% today. My yqjat's (Jan 2002 500 LEAPS calls) moved up about 20%, and my auadj's (April 550 regular calls) that I had bought one contract of for comparison moved up about 30%. Cool!
3. Listen to edamo. Above he wrote that one shouldn't buy options with market orders. Unfortunately I didn't read that post before I bought, and simply did my trades at market online in my Schwab account, using their rtq's for guidance. Well, as I picked up GMST Aug 85 calls during the day (from 11.5 on down to 10), I noticed that the price I paid was always a quarter point or so above the listed "ask" price. At first I thought there had simply been an upward tick, but checking the rtq's after my buys it showed the same bid-ask quotes as before, with my executed order now posted as the most recent buy, sure enough above the ask.
I've always had very good dealings with Schwab, so I was curious about what was going on, and went into my local Schwab office to find out. To illustrate what I meant, I did the same trade in front of an employee there, while at on the phone with my "platinum services" contact. (I had still wanted to pick up some more GMST calls anyway.) Sure enough, the same thing happened: the execution was a quarter point above the "ask" price listed both before and after the sale.
Although the employee and I both felt convinced that something fishy might be going on, the "platinum services" guy swore that it was just a problem with the time lag on the rtq's. He said that in the future, I should make my options trades over the phone, to be sure I was getting the exact price rather than a delayed one (or, thinks I, a possibly cooked one). The employee confided to me that others had complained about Schwab's options executions as well, and that they were considering changing how it was done (and/or how the quotes were obtained). Anyway, just thought I'd share the experience. Almost the first negative one I've had with Schwab, and as usual, cleared up after talking with them.
COMMENTS
1. 100, instead of going on margin and then trading options to pay for it, why not just buy LEAPS in the first place and hold on to them, buying in to the common later if you want?
2. Poet, it's "tuches," not "tuccis" (those are the Italian actors...). :0)
3. Poet and Jill, could y'all get your story straight about the Jan 03 LEAPS release date? :0)
4. GSTRF LEAPS are an interesting idea....
5. If pressed, I might offer up an anecdote about my enounter with Scholes...
later,
bubbleboy@optionsBfun.com |
