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 : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: venividivici who wrote (134453)	7/16/2006 11:37:49 AM
From: Henry J Costanzo	Respond to of 209892

Good points, VVV...Unfortunately, i have a history of getting screwed on stop loss executions.....and repeated little losses on a stop here and a stop there can add up. And.......if my EW or TA dictates, no problem in closing out any time...except, of course, danger of whipsaws, which can be terribly demoralizing.....LOL

To: venividivici who wrote (134453)	7/16/2006 11:40:41 AM
From: skinowski	Read Replies (2) \| Respond to of 209892

why not just buy front-month options and stop out of the position Big spreads and most of the time relatively poor liquidity are a problem. They tilt the playing field quite sharply against a user of such a strategy. The only advantage in my experience which options offer over Futures are swings in the VIX. If you unload puts when there is fear out there, you get paid extra.

To: venividivici who wrote (134453)	7/16/2006 3:29:35 PM
From: Cisco	Read Replies (2) \| Respond to of 209892

>> I would think that the opportunity cost of holding a six-month out option would be higher than just allowing yourself to get stopped out of a front-month option.<< Perhaps I don't understand what you are saying here or there is a fundamental error in my understanding of options, but this doesn't make sense to me. Is there a reason why you can’t stop out a long expiration option just as well as a short expiration option? Let’s say you buy 10 Aug 38 calls on the QQQQ @ the ask of 0.35 and 10 Jan 38 calls on the QQQQ @ the ask of 1.70. Next, let’s run two examples where we assume that we close out or exercise both positions on the Aug expiration date. In example one, we will say the price at expiration was 38 and in the other it was 39. Would not the longer call still be a better value in both cases? Aug 38 Call: Breakeven Stock Price on Aug 19th: 38.35 Profit at 38 closing price on Aug 19th: -$350.00 Profit at 39 closing price on Aug 19th: $650.00 Jan 38 Call: Breakeven Stock Price on Aug 19th: $36.65 Profit at 38 closing price on Aug 19th: $728.51 Profit at 39 closing price on Aug 19th: $1,353.33 Supporting analysis: