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Strategies & Market Trends : Learn Options on Futures
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From: Murray Grummitt7/29/2007 11:08:05 AM
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It has taken 8 days from the recent high of 721 for the OEX to reach the point at which we are now. High P/C ratios indicate we are very close to an intermediate bottom. As the stock indexes head down here to a bottom I wonder if it would be better for me to sell puts rather than buy calls as has been my habit in the past.

I suppose those on this board would prefer to trade options on index futures. This is something I have never looked at. I presume options on the ES are the best to trade because of the future's high volume.

But in any case given the time decay nature of options I presume the answer depends on the expiry date and the length of time one intends to hold the options. Is there a formula to determine if one is better off to sell naked options as opposed to buying a wasting asset? Historically 60% of option buyers loose money, 20% break even and 20% make money. Those are not good odds for option buyers so maybe there is some other option!
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