<font color=green>Option Trading:Generally established rules by an ex-MM, Mark Peterson CPA...
Member 7279667
Thanks much, Mark. di
--------------------------------------------------------------------------------------------------------
Message 12652116
>>> So...Here are some generally established rules (50,000 foot view):
1) Don't write CC's on mo-mo tech stocks in an up market.
1.1 Don't sell CC's at low volatilities on tech stocks in an up market.
2) Generally, writing options is more profitable than buying them.
2.1 Selling options at high volatilities is more profitable than selling options at low volatilities.
2.2 Selling options at high volatilities is more profitable than buying options at high volatilities.
2.3 Buying options at low volatilities is more profitable than buying options at high volatilities.
2.4 Buying options at low volatilities is more profitable than selling options at low volatilities.
3) 90% of people who buy options, over time, lose money.
3.1 90% of people who buy options at high volatilities, over time, lose money.
3.2 90% of people who sell options at high volatilities, over time, make money.
4) Use CC's to partially hedge long position, not fully hedge them.
4.1 Rule 1: Never lose money on an investment
4.2 Rule 2: Never break the first rule
Remember:
1) Writing PUTS is BULLISH. Buying calls is BULLISH.
1.1 Selling puts at high volatilities is smart.
1.2 Selling puts at low volatilities is dumb.
1.3 Buying calls at low volatilities is smart.
1.4 Buying calls at high volatilities is dumb.
2) Writing CALLS is bearish. Buying puts is BEARISH.
2.1 Selling calls at high volatilities is smart.
2.2 Selling calls at low volatilities is dumb.
2.3 Buying puts at low volatilities is smart.
2.4 Buying puts at high volatilities is dumb.
Mark Peterson<<< |
