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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Saita who wrote (59239)	8/3/2002 8:17:37 AM
From: J. P.	Respond to of 94695

Serguey, I never fool myself. I didn't go into the pitfalls of futures, but was just pointing out that for directional speculation futures are superior to options, wouldn't you agree? Even with futures bid/ask a tick, compare that with options where the spread can be 10% or more of your initial cash outlay. You can sell the options premium, but then you still have the bid ask premiums to contend with and also if it goes against you the losses can mount quite quickly. I was a little lazy in going into detail why stop orders don't work very well with options, and I'll only say now part of the reason is by the time you hit a reasonable stop with options you may be down 50% or more (bid/ask spread, time erosion, volatility erosion) and how effective is that? Far easier to contain a loss with futures even if you have a few ticks slippage in the process.