Hi Raymond: I doubt I'm any smarter than you are, it can take me a
long time to figure out some simple things. With options I carried
forward some experance I had from handicapping dogs at the race
track..I was not a weekender at the track. So I guess that gave me
a sort of frame of referance to carry into options. The odds are
aginst you up front..and unless you have inside info you have to
live and breath what ever system you come up with. It leaves
little time to have a life, that's the rub, and the main reason
I'm considering getting out of it. It was the same at the track,
only about 10% made any money on a regular basis, the big one time winners almost always gave it back and then some.
You'r not betting on or aginst the DOG, you betting on
your judgement and aginst the judgement of others. Options are
Paramutual Betting..all dressed up to make them respectable and
called investments..your out and out gambling "aginst" other
option buyers and the specialist ( MM ) is the dealer who takes a
cut. That cut is much larger than they want you to know about,
and there are so many ways to hide it that I won't get into that.
After a while you can see were some stocks carry a real greedy
specialist ( much bigger spreads than normal ) so no matter how
tempting they look I avoid them. Sometimes you find a specialist
thats asleep..or maybe new at the game..<G>
You almost have to get to know the pattern the specialist uses on
each stock you play..and ( at the Dog track the way they run the
rabbit on certian races made a differance.but it was something
you had to pay hard attention to to catch it. ) Every one was
just handicapping the dogs, but not the track. I lost a lot of
money at the dog track before I settled down. Then after I
setteled down, I found that with the insider skiming..the amount
of profit I could make was not a lot..and to make it I had to
be there every day..track every race ( well at least the class of
race I wanted to bet in ) The M class was like betting on IPOs
the AA was like the blue chips..each class had it's style beyond
that there was the crowd..you were in essance betting aginst the
crowd..I could go on and on, when I saw what was happening over
here with options I said , hey I don't need to go to the race
track..and maybe this won't eat up all my time...( about that I
was wrong ) I can do it home but it takes living and breathing
the damm stock market, and it's not all that profitable on a
regular basis..and you have to be able to ride out a few storms
too..one thing is always be conservative with your bets..don't
worry about the ones you didn't bet on..( only ones you missed
because you would have had you saw it )..like ADBE the other day
I was looking else where when she hit my target..( you have to have
targets going in )..if you have your target don't let any opinions
shake you, you are betting aginst opinions to start with so letting
opinions change your mind is self defeating. Stick with stocks
that have a pattern ( if the pattern changes get away from it, no
matter how good it was wait till it shows a pattern )..you are
betting it will follow the pattern..and it will about 80% of the
time but not all have a rolling pattern that can be used for options
and a lot of the ones that do; also have a lot of sharp people already
betting them..how do you find what the crowd misses..thats the
idea..and it's not easy you have to look under a lot of rocks,
and I got so many open positions right now I'm almost punch drunk
keeping up with them ( diversify too ) keep in mind any stock
you would play puts on also has to give you chances of playing
calls..or it's not a roller..and if it uptrending or downtrending
the 200 DMA..does the specialist have his premium set toward the
trend...if 30% of the move goes to cover commisions and spread
and 70% is left to the pot..( seems to be about average )
you dont just need to be right just over 50% of the crowd, that
20% to 30% take the brokers and specialist get out of the options
( seems high hu ? ) but it's not. Any way 20% is about the low
end..and even with that you have to beat your fellow man "70%"
of the time "JUST TO BREAK EVEN" were it's 30% and often it is
then you need to be in the top 80% to "break even"..in other words
to win any money on a regular basis you have to beat about
80% of them; and that many will lose money..whats left then
has to be split up among the 20 percent that are in it for
real..half of them will come away empty on any given day,
as the other half will take that day..( yesterday I had
16 open positions and only one came into money ) the tide
was not my way..the dogs (puts) were having a rally..and the good
ones (calls) were getting sold off..<G> In face of this I
laid down 3 more bets. I need to do some other stuff but can't
untill I close out my positions..so even though I found two
more after the bell last night, and I know I should pass them up
but knowing me I'll likly be all over them come Monday.
I never bet , and won't bet the big money bets you put down, I can't
afford to. All my option bets are small and spread out, but I
do a lot of churn..right now the tide is aginst me, but
that can swing; of my churn I'm down 2% for the month so far,
if I can get to were that is a 2% gain I think I'll be doing ok
for the month.
My long winded thing on the CAP gains Tax was not said real well,
but at least I got it out of my system..the whole thing is a
slick set up and covert way of stealing some retirement money from
some unsupecting old folks that were conned into buying tax free
bonds..Wall street and the halls of congress are lined up with
more shysters, and barkers than you'll find at any carnival.
Hell I might go back to the track, I miss watching the crowd..
I can't play this option market and mess with the track at the
same time..I was doing a little better at the dog track,
the action is so fast I have not had time to tally exactly how
much up. But the track had limits, as you toggeled the odds board
if you bet big bets, so big bets on your part reduced the odds
you got..it's somewhat like that here but not as much, if you
bet just out of the money like I do to get more leverage..
then if she does not come into the money you defeat yourself
somewhat with big bets.."who is going to buy your out of money
bets if you own the big chunck" If your going to play in the
money bets you may as well go long on stocks good stocks.
Another angle I have not got into yet is long term calls (leaps)
and instead of selling them when they come in the money use them
to cover a short sell..that gets away from some of the option
spread and the commision on buying/selling 5000 shares is a lot
cheaper than buying selling 50 contrats..and if your way out on
your leaps you should be able to use them for cover several times
before cashing them in. I never have and won't ever "short" a stock
and not have ( calls ) to back me up..only a fool would get
into that. In as sence I'm a gambler..but I have not ever bought
a lottery ticket..and won't , it's a princable with me..if I can't
handy cap it, and look for the edge then no bet. There is no such
thing as a system that will pick lotto numbers..thats all a scam.
Jim
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