ky.........puts, calls, gut feelings and software...
the "experts" will speak of theory, formulae, the greek alphabet, which in a normal or slow moving market, allows the ability to analyse and set a position........
it's a whole new world.....the dynamic of a fast moving stock makes finite analysis worthless....by the time you get the answer from the black-scholes calculation, all the figures you took time to input have changed.
it's actually easier to trade options in a fast moving market....the requirements are simply an intimate knowledge of the price action of the underlying common, and the ability to technically discern an oversold/bought condition in same....
entry position in a fast moving market is something that most don't understand....many prefer to chase....not wise
if you are a buyer, and you want to use options as an investment vehicle, in the form of a stock replacement, then stay with ditm positions...they will move about par with the underlying, have intrinsic value and give the same leverage as a margin loan...to go dotm is pure speculation, but can return rewards with high risk.
above all else, in any form of investing you and you alone must determine your risk tolerance and how it matches your investing goals......if you can't afford a loss of capital, then options should not be a consideration....
good luck |
