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.

Pastimes : Rules We Can Learn From -- Ignore unavailable to you. Want to Upgrade?

To: Caroline who wrote (9)	4/25/1998 2:19:00 PM
From: The Perfect Hedge	Read Replies (1) \| Respond to of 109

I think stops on options are too tough.I'm starting to make mental stops on options but sometimes they fall so fast that you miss the exit.Thus,I'm staying away from big positions on options..GD

To: Caroline who wrote (9)	4/25/1998 4:30:00 PM
From: Ronin	Respond to of 109

Stops on options are an interesting thing. I webtrade with Schwab and they allow a stop on options "for the day only". The only way I can successfully trade with stock options is to buy well into the money on liquid issues, such as the OEX and heavily traded stocks. When the option moves point for point with the stock, it gives a little breathing time to maneuver. Ronin

To: Caroline who wrote (9)	4/25/1998 8:08:00 PM
From: Dwight E. Karlsen	Respond to of 109

Caroline, I buy both calls and puts. Right now I own puts on the MSH index, and late yesterday near the lows of the day for Nasdaq and the DJIA, the spread on my MSH puts was $1. I was seriously considering bailing out of my MSH puts. About 10 minutes later I looked and the spread had increased to $2: The bid had stayed exactly at $16.50, but the ask had increased from $17.50 to $18.50. I refreshed the quote in a couple minutes to see if they had adjusted the bid: they hadn't. Considering it was going to cost me $2.00 per contract just for the privilege of trading, I decided to not sell my puts. Since my contract strike was in the middle of the range that the MSH traded at, the bid or ask moved about 1/2 the amount that the index moved. In other words, the CBOE mms made it all but impossible for anyone except them to make any money. Anyway, no I don't use stops on my option purchases. If you want out of a trade because you are no longer comfortable, IMO it's better to either place a limit order and be patient, or else just be patient and watch--then bail at the best time which you think is expedient. Different strategies work for different people.