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Strategies & Market Trends : Value Investing
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To: TimbaBear who wrote (12129)3/1/2001 3:41:39 PM
From: Allen Furlan  Read Replies (2) of 78613
 
Timba, shame on me, I have never read McMillan. There is a wealth of educational material on the cboe web site(all free). Also they conduct seminars throughout the year and throughout the country. I really don't subscribe to the notion that a trader can beat the system. You will notice that almost all of the literature is focused on technical trading techniques. Rather I use options for risk diminishment. I think that ratio writes make sense when the out of the money options seem mis-priced relative to the outcome if the stock rises to the strike price(waxs position). Also ratio of option to option sometimes makes sense. For example I did a 20/10 on cmgi, selling 35 stike leaps and buying 10 strike at zero cost. I wouldn't normally touch cmgi with a ten foot pole. Also selling in the money puts is an economical way to make a bet on a stock rising in price. I sold 30 wacra(May 5) at average of 1.6 because I would consider warnaco at 3.4 to be a good investment. As Paul Senior can tell you there are many good opportunities in arbitrage and quite often the most economical way to invest in these is by doing call spreads or put sales. Bottom line is that I believe options are a tool to take advantage of unique situations which arise from time to time and do NOT subscribe to use of beta and volatility gobbleydook.
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