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Pastimes : Tidbits -- Ignore unavailable to you. Want to Upgrade?

To: hivemind who wrote (758)	7/30/2000 2:44:59 PM
From: Didi	Respond to of 1115

hivemind-re: overall Hi! Appreciate your understanding. Please don't feel bad about mistakes. That's why we are here, sharing ideas so we can minimize them and gain together. All of our contributors are quite generous and talented in their fields. The below post recaps a little about them. Message 14089468 Am fairly new to options trading. Learned options from Ed (edamo) ~18 months ago. Aware mainly of theories, trying to gain more experience. Humbly more familiar with the equity arena. Ugly correction: Yep ;-). Options might hedge somewhat if investors learned and knew how to use them properly. Heard that some floor traders hedged ~10-30% of their ports due to this costly insurance. .............................. T/A: Yes, Wm%R is awesome IMHO. Might need to wait till the price changes direction prior to buying/selling. Fairly significant with options, likely giving up a bit of premiums if too early or late. equis.com As with all overbought/oversold indicators, it is best to wait for the security's price to change direction before placing your trades. For example, if an overbought/oversold indicator (such as the Stochastic Oscillator or Williams' %R) is showing an overbought condition, it is wise to wait for the security's price to turn down before selling the security. (The MACD is a good indicator to monitor change in a security's price.) It is not unusual for overbought/oversold indicators to REMAIN in an overbought/oversold condition for a long time period as the security's price continues to climb/fall. Selling simply because the security appears overbought may take you out of the security long before its price shows signs of deterioration. Am pretty much like you, not a day trader, therefore set my chart parameters toward smoothness (according to renown John Murphy). Shorter time frame might be more sensitive (early signals), but noisy (false signals and/or whipsaws). Buy/Sell & SMA/EMA (IMHO helpful): ...Per John Murphy (Tech Analysis, p.199-203), technicians commonly used SMA, though EMA might assign a greater weight to the more recent data, ...5 & 20 day averages for buy/sell: ......buy signal when the 5 day crosses above the 20, ......sell signal when the 5 day moves below the 20. ...10 & 50 day averages for up/downtrend: ......uptrend when the 10 day crosses above the 50, ......downtrend when the 10 slips under the 50. ...Per George Fontanills (The Options Course, p. 40): ...10 & 30 day averages for buy/sell, ......sell when the 10 day goes below the 30, ......buy when the 10 day goes above the 30, Technicians go to great lengths to fine-tune which time spans and averages to use. When you find the right time frames, the moving average is probably the simplest and most effective technical tool. Page 119, I* (G. Fontanills) prefer to sell options with around 30 days left to expiration because as an options seller, I* receive a credit that I* hope to keep by having the stock expire OTM. I* want as little time as possible on the life of the option because options lose the most value in their last 30 days. ............................... Call selling: ...Per Options by CBOE, p. 104: The covered call writer ...has limited profit if the underlying is above the strike price and risk if the underlying declines substantially. He is neutral with a bullish bias. The naked call seller ...has a position with limited profit if the underlying is below the strike price and unlimited risk if it rallies substantially. He is neutral with a bearish bias. Compare the expiration profit/loss diagrams of covered call selling and put selling. They have the exact same shape. This can come as a surprise to many investors who feel that any option selling is extremely risky. Cash-secured put is fairly conservative relative to naked short put. ............................. Free option seminar by the Options Industry Council (OIC): ...If convenient, might not be a bad idea for any beginning option investors to attend. Highly qualified instructors, exchange professionals (some former floor/institutional traders). optionscentral.com optionscentral.com Free CBOE's "The Options Toolbox" ...Equity Options, Index Options, and LEAPs. cboe.com Risk: cboe.com ...................... Textbooks: You sound quite informed, must have read and researched a bit ;-). IMHO, below are quite helpful, among a mountain of textbooks surrounding me. 1) Technical Analysis of the Financial Markets...John Murphy, 2) The Visual Investor...John Murphy, 3) Technical Analysis from A to Z... 4) McMillan on Options...Lawrence McMillan, 5) Options As A Strategic Investment...Lawrence McMillan, 6) LEAPS...Harrison Roth, 7) Options Essential Concepts & Trading Strategies...CBOE, 8) The Options Course...George Fontannills, 9) Derivatives...Fred Arditti, + many more in the link below. invest-store.com Online discounted book retailer: alldirect.com --------> ~40% off list ................................... Lots more useful options info at our sister site, Wings-FPT: Subject 36031 Our thread headers contain fairly useful link compilations. Scanning these links might keep you updated on various developments. Well, got to go till next week. Have a good one, hivemind ;-). di