well Dan, I was just getting ready to reply to sberg's post and then I saw yours...
I agree, I think option models take into consideration a generally rising market over the long haul. and over shorter periods of time, it's is well evident that the market prices-in when markets are choppy, sideways, expected to rise or expected to fall. artificial or real, the pricing is there.
as far as trading this week, that's a very good and cheap lesson to learn. it's one thing to paper trade (not that that's what you were doing) and actually getting filled.
there were a lot of concerned option specialists and MM's early this week. a lot of autoexecution machines turned off. you really had to do your calculations and set your limit prices appropriately to get good, honest fills from the exchanges. I fear many ppl got smacked even on their limit orders if they trusted what they thot were real/RT option quotes.
as for leaps NP's... I'll say again I don't do LEAPS, primarily because it's too far out, but to me, selling LEAPS goes against trying to capture optimum time value decay. besides not having any room for error (where are you going to roll out to?)
w/o any serious analysis, I'll throw out this... why not just buy the stock if you think it'll grow over time? or buy LEAPS. if you sell LEAPS and the stock tanks, you could get assigned prematurely... in a bear mkt, that is likely to happen. |
