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Strategies & Market Trends : Canadian Options -- Ignore unavailable to you. Want to Upgrade?

To: Dan Courtemanche who wrote (842)	2/24/1998 8:43:00 PM
From: Sleeperz	Respond to of 1598

For the mass majority it is not doable. 90% of all options expire worthless. Trading requires REAL TIME quotes and watching every 15 minutes at least. With options watching at least every minute or even tick by tick. What you should do is stick to one volatile, high volume stock like Intel and trade the stock. If you can make money trading the stock you more likely than not should be able to do as well if not better through leverage on the Options. If you can't successfully trade the stock at least you will have lost less money trading the stock, than losing almost if not everything on the options. cl >>> Simply buying Calls and Puts by forecasting the underlying stock. No spreads,straddles,writing,etc. Is it doable?<<<

To: Dan Courtemanche who wrote (842)	2/24/1998 9:23:00 PM
From: Dave.S	Read Replies (1) \| Respond to of 1598

Dan: I've been a professional options trader since 1989. I would say trading professionally, using a client account through a discount broker, would be very difficult. As a Pro trading on the Options Floor of the TSE, you can set up positions which clients are not allowed to use. For example, I could buy 50 at the money March calls on a stock and immediately short 5000 shares against the position. This could be quite profitable if the stock drops rapidly. Client accounts are not allowed to do this on a one-to-one basis. There are other advantages to floor trading which are not available to the clients. These are lower margin requirements and instant access to the equity and option markets. I think one also gets a better "feel" for the market being on the floor. Dave

To: Dan Courtemanche who wrote (842)	3/1/1998 4:36:00 PM
From: Dave.S	Read Replies (1) \| Respond to of 1598

Don: I want to add to my remarks from post#844. I hope that I didn't try to discourage you from trying to become a professional options trader. You can do quite well as a buyer of options but there are some basic rules that you have to follow: 1) Don't trade all the time. Wait for optimal conditions before buying premium. 2) Never buy when the volatility has spiked for some reason. Chances are the vol will return to normal levels and you'll lose even if the stock price has gone your way. This usually means don't buy just before an event which will cause a discrete movement in the stock price such as an earnings report. Wait until the vol is lowered. High vol on the calls, for example, is caused by clients buying from the specialist who has to raise the vol (thus raising the prices) due to the greater demand. 3) If you want to buy a call (for example) on an uptrending stock, wait for a dip in the stock price and buy then. Do not chase the price upwards. Dips are caused by profit taking and are usually a good entry point. This takes a bit of nerve but has a high probability of success. There you are, a simple formula for success in buying options. The biggest problem as a pro is staying out of trouble. That is, waiting for this correct entry point and avoiding making mistakes because of boredom. The best traders only trade infrequently but recognize the opportunities. I, for example, have found that my trading frequency has decreased over the last 4 years. Dave