Re: options
I gave up on all types of options a while ago. At first I just sold calls. Then I took an options course, examined every possible strategy (they hand out a nice cheat sheet), and chose synthetic longs and call-ratio backspreads as my tools, using real time data with OptionStation. The level of sophistication in pricing these things is much higher than most casual options players suspect, and IMO the market is much, much, much more efficient than stocks. After trying futures, options, tech analysis, and feeling that I was running in circles (thankfully I never lost my shirt - especially in the commodities) I've determined that plain stocks are the most rational area to find discrepancies in value large enough and analyzable enough, given the facilities available to me in terms of time and technology, to give outsized returns. I agree with Bob that the best books are by McMillan (ignore the stuff from Angell).
But everyone should also know exactly what they're getting into, and that means seeing the real-time options pricing and search software in action prior to doing it. IMO, options are absolutely nothing about the price of the underlying security (they are everything about correctly interpreting the security's volatility differently than the market), and hence poor substitutes to simple shorts, which for now I'm continuing to use.
Mike |
