Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Befriend the Trend Trading -- Ignore unavailable to you. Want to Upgrade?

To: freelyhovering who wrote (7643)	5/25/2000 11:01:00 PM
From: Hands Off	Respond to of 39683

Myron, I don't know enough about puts and calls to answer your question. The little I remember says that an option price is dependent on the 1)price of the underlying 2)strike price 3)time to expiration 4) volatility of the underlying 5) current interest rate. Based on these, I don't know how an option price would vary to the underlying. In theory it would behave the same way but with a different magnitude based on the strike price and expiration date you chose. The beauty of this system is its simplicity. With options you would have to make 2 additional decisions about strike and expiration making the process more complex. I am not having a lot of luck as of yet implementing this system so take my advice for what it is worth - nothing. But I would not mess with options until I could trade the underlying profitably.

To: freelyhovering who wrote (7643)	5/25/2000 11:29:00 PM
From: Mark Z	Read Replies (1) \| Respond to of 39683

Myron - Puts and calls can work under 2 conditions. First, you want to go deep in the money to maximize delta. That is, if you play with BVSN 35s you're not going to get much delta or movement in the option as BVSN moves in the mid-30 range. In addition, options have time premium that erodes and there's less time premium to erode the deeper ITM you go. This is especially true the 2nd and 3rd weeks of the month. Second, you probably want a stock that swings 5 pts minimum. I've been using YHOO strike 100 calls & 150 puts to play YHOO and YHOO has traded in a 10-20 point range. OTOH, when I was playing SCH, the range was less than 10 pts and options didn't make a lot of sense given a 2 point move might only produce < a full point move in the option. Bear in mind spreads are much wider on options than stocks and you generally have to eat some of that especially if you're playing less liquid DITM options. One other note...you can't trade equity options pre- or post-market as you can stocks.

To: freelyhovering who wrote (7643)	5/26/2000 5:38:00 AM
From: Ken Adams	Respond to of 39683

Myron, I like puts and calls. I do more of them on the OEX, but have done them on equities as well. First of all, they are far more risky than just putting your money down on the equity. You can (and I have)lose 50% of your capital in a few minutes. You also can double it in just about the same amount of time. Options have come up for discussion here a few times, but I don't think they have a place for most of the threader's we see here (probably including myself <g>). Ken