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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (20679)	6/18/1998 5:38:00 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 94695

RE > The house does lose from time to time! <<< of course it does, same as in Vegas, but you would likely be surprised at how often it loses to "the brother in law " <G> I'v got into options before, and explained all I intend to on them, for the time being. The buyer is at a huge disadvantage in the long run, and unless he gets a very good system he don't tell the world about he will not over time come out ahead. As for the dump put writers , in most cases they will never buy back the puts ..they momentum bought the stock by front running, and have already shorted the stock against the box locking in a profit they sell the put for the premium , and will not buy it back..it's there to close the short if she falls. In other cases they want the stock cheaper than it is, I did that with AMD and is how I accumulated her in 96 from 16 right down to 10.25. I used the put premium to help pay for the stock, never once thought of buying the put back. I Did the same with PSIX , no body but nobody bought PSIX cheaper than I did, if you fix your sights on a stock you think will go up, and your sure you want to go long on it, there is not a safer way to do it than by writing puts. Even if your wrong and she gets put to you , you got her cheaper , and in most cases can still unwind with a profit, or like I did with AMD , just take the stock and write more puts. But beside all that most of the big put positions you see are there to close a short. These people work with targets and know how to "buy a lock" I've explained LOCKS before but until some one sees them it's like I'm just spinning my wheels explaining them. If some one don't know what a lock is, I wonder how they get the idea they understand options at all. Locks can be hard to find, but some PROs have computer programs running robots that continually hunt them down, and that's all they play, skimming the spread on every one they find. I did a full example on this thread several months ago, and actually traded it, ( xcit ) posting my moves as I made them, ( not two or three days later, but withing 15 minutes ) and there was no way I could lose, that is what a "lock" is all about. I don't have the way to scan for them, but by accident I do spot one from time to time, you catch the spread right on the PUTS, and CALLS, buying the call shorting the stock , and selling the put. The profit can be skinny but it's a no lose bet if you know how to spot and execute it. And if the stock moves ( up or down enough ) you can get a good reasonable profit, in turn for giving up on greed, and working the percentages. What I've found on SI is lots of people who claim to know about options but don't even know what a "lock" is, yet that is a basic fundamental in understanding options. Buyers by and large are stuck with selling to other buyers and in a third market fighting it out with the floor traders and so on. 85% lose money over time, to the 15% that know what they are doing, and even that 15% don't win all the time. Don't every get the idea that there is a winner for every loser, that is a far cry from true. The expence on options percentage wise is even higher than on stocks, ( much higher ) and they trade back and forth and back and forth that in many cases the trading cost ( over head ) in the price of an option, adds up over time that it forces many more losers than winners. Unless you want to count the Brokers as the winners, which of course they always are, unless it's a "brother in law deal". Even as they write them, they already went short the stock, and the more they can get that option to trade the more they will make. Jim