John: Options eliminated two of the most unpleasant of my head games in speculation:
1. Leverage - in the money around $7 is the same no matter what the price of the underlying stock. I used to agonize over finding stocks that were in a range allowing me to hold 5-6 positions in my account. Now, the price doesn't matter.
2. Stops - Easy to calculate, and set based upon technical factors and entry point, but very hard to place the order. No need with options. Because of the intrinsic value and time premium, no need for stops and the loss if it goes sour is the around the same as a stop loss, properly placed.
Now, options do feed the "greed bug", but so far that has not been a problem. Spreads are terrible, commissions are higher than stocks, liquidity is not great, they tend to lag the stock price when volatility appears like today, but I've had a really super year using them, John.
That's about it, John. |
