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

To: Dominick who wrote (27222)	10/12/2002 12:10:28 PM
From: TraderWithNoName	Read Replies (1) \| Respond to of 39683

Dominick: Q: Could you tell us why you are using January and February data? A: Because that is when I did the study,last February. Collect your own data on any current month..it will look just about the same. Q:...point out what you feel are the important points? A:There is only one important point-that those charts you see in the trading books about time decay are for real. Time decay can really hurt you the last 7-14 days of the contract. If you are thinking about buying out of the money Oct options next week...think again. Even if you buy in the morning just for a daytrade don't be surprised if the underlying instrument goes your way and you find your option lost value at the end of the day.Volatility may hide the effect for a day or two,but once the volatility eases up,look out! Time decay is still at work.Watch what happens to premiums if the market levels off for a day or two next week. Read "Option Volatility and Pricing Strategies" by Sheldon Natenberg....then read it again.