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Strategies & Market Trends : Ask DrBob -- Ignore unavailable to you. Want to Upgrade?

To: virtualsignal who wrote (2353)	8/30/2000 6:32:27 AM
From: Louis V. Lambrecht	Read Replies (1) \| Respond to of 100058

VS - expiry week plays "Maybe we could toss out a few candidates (ibm sunw qcom nxtl mot jdsu hd ge) and we'll kick around some trading ideas. Think there's any interest? " Not that simple. When writing options (theta play), I look for: The underlaying must have had a strong move (increased IV) which you suspect to have ended. Your target price of the underlaying should be within one strike leaving enough security to play the next strike. There should still be some theta value (the maximum profit you can make if the price of the underlaying does not change). Ideally, the strike premium would be mispriced compared to the two nearest ones, usually one with low OI. There still must be volume on that series of options and enough strikes to choose from. Or the share price is above all (below all) strikes, price at which there is no interest left for the MMs to try moving the share. .... So, you would trade on shares you usually follow, those of your radar list, those of which you know the behaviour. Even with a limited list, you'll have a bad night checking the premiums (2 ITM, 1 ATM, 2 OTM, both calls and puts = 10). I would sa that is is rather the matter of luck to find the plays. Would you buy options (delta play): You would expect the share to move towards your direction and you would buy deeper ITM as the time decay has already disapeared and the delta is close to 1. And here you should have day-traders skills in order to catch the intraday moves. Be as quick to trigger the sell button. The best play, trying to catch the rat-tail, occurs very seldomly. This is a play that lasts only some minutes and that you only can play, while on the phone, with your full-service specialized option broker. Hope to get there some day. Above is writtien while digging into my memory, and it was more a fun play than a real tactic. Selling options carry unlimited risk, tada, tada, tada,... Further, as OI and volume shrink dramatically in the last week, any concerted move on specific options could be considered as a manipulation by the controlling bodies. This is not an options traders thread. OK to check some stocktimers plays in options instead of stocks ?