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.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Grantcw who wrote (141078)	10/15/2010 11:47:39 AM
From: CommanderCricket	1 Recommendation Read Replies (1) \| Respond to of 206184

cwilly, First, learn to trade TD Ameritrade's "Thinkorswim" platform. It was designed for options trading. Second, I like trading in lots of 10 for options (represents a 1,000 shares of stock). Depends on your capital though. Forget about the commissions and consider them a cost of doing business. Regarding the bid/ask spreads? Place your sells/buys mid point between the two and wait. I can usually do better on the bid/ask on the higher priced stocks like IOC, BTU, etc...then the lower priced stocks such as ATPG. Returns? I'm happy with a goal of 2% a month and have beat that number since starting trading options. It's a full time job and requires you to completely understand the fundamentals of the stock. It's a lot of work. Trade what you know and take profits when presented. No buy and hold with options - LOL

To: Grantcw who wrote (141078)	10/15/2010 11:49:51 AM
From: Salt'n'Peppa	Read Replies (2) \| Respond to of 206184

To do a covered call, you need to own 1000 shares of ATPG and then write 10 contracts on your holdings (numbers for example only). This ties up a considerable amount of capital and does away with any leverage you might hope to exploit by trading options. You get the exact same risk and profit profile by writing naked puts on ATPG. You don't need to own the shares (which carries its own risk) and you can leverage more than twice as much (compared to covered calls). People are scared of the term "naked put" but your downside risk is outlined as soon as you write them and you already know the profit amount as you are credited right away. The worst that can happen is that you are put the stock at your option strike price, minus the premium you have already been awarded. Assuming you want to own ATPG, this is not a problem. The main downside to naked puts is that of opportunity cost. If ATPG runs hard, you keep your premium but miss out on the run-up. Naked puts are great for sideways markets, which is where most companies trade 95% of the time. I use TD as well and am charged $29 for 10 contracts, $39 for 20, $49 for 30, etc. You need to look at the premium being offered, the time to expiry, and decide for yourself what is "worth it". For me, on a <30 day trade if my fees are 5% or less I am happy. Also consider if you plan to hold to expiry or cover early. If covering early, realize that you have double the commission. Cheers, S&P [edit] Just read CC's response and agree that Thinkorswim is a great platform. A bit complicated at first but worth mastering. TD has the platform in both its US and Canadian accounts.