Options: Low Cost Investing

[New-born baby]

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LEARN THE OPTION GAME HERE

[peanuts]

New Daddy,

Let's start with this: would you care to list for me stocks that you currently own that are optionable right now?

Do you have a margin account?

Are you allowed to daytrade or not?

Can you post your answers on "Options: Low cost investing?"
Thanks!

NBB,

First of all, THANK YOU! Tuition for your school is pretty cheap... let's hope the education is not! ;^)

Here are my marginable securities:

FRGB
GFIG
DWCH
USLM (only 75% marginable though) and don't tell ANYONE about this stock- this one is MINE all MINE!!!!!!!
SIM
NSS
ZZ
MVCO (currently no position)
BAM (currently no position)

I do have a margin account with Ameritrade, and I can (and do) day trade.

How do companies account for options expense?

Thanks a million (I hope)

[skiracer]

Absorb what you can on options here but take a look at this site, www.CBOE.com for learning about options. I also have an extra CD on Options 101 from Bernie Schaeffer which if you give me your address, PM it to me, an I will mail it to you. If you're serious about learning to trade options then for the best education you can get go to that CBOE (Chicago Board of Options Exchange) site and spend some time there.
Regarding USLM, why would you post it out there if you didn't want anyone to see it in the first place. NB doesn't have to tell anyone about it if it's right there in front of everyone to see. Check out that site. BTW, it's all free.

[peanuts]

Regarding USLM, why would you post it out there if you didn't want anyone to see it in the first place. NB doesn't have to tell anyone about it if it's right there in front of everyone to see. Check out that site. BTW, it's all free.

Thanks Skiracer,

I will send you my work address-

Re: USLM- I don't mind sharing here (it's not like Yahoo, RB, or I Hub) Ernie has invited some good people here. I just hope that nobody goes and blabs USLM all over the place. Someone is doing this on Yahoo! I had to give a big write up on spamming other boards on the USLM board. I am debating whether to even waste my time on Yahoo! anymore. Bunch of garbage there... But, that is where I found the HUGE one and a few money making ideas there, so maybe I'll just cruise through, rather than post. In any case, I do not have what I consider a full position in USLM, yet... so that's why I would appreciate the quiet... keeps any buzz from affecting the price (+ or -)

BTW: what is your experience with options? Have you been successful? How aggressive are you?

[skiracer]

Thanks Skiracer,

I will send you my work address-

Re: USLM- I don't mind sharing here (it's not like Yahoo, RB, or I Hub) Ernie has invited some good people here. I just hope that nobody goes and blabs USLM all over the place. Someone is doing this on Yahoo! I had to give a big write up on spamming other boards on the USLM board. I am debating whether to even waste my time on Yahoo! anymore. Bunch of garbage there... But, that is where I found the HUGE one and a few money making ideas there, so maybe I'll just cruise through, rather than post. In any case, I do not have what I consider a full position in USLM, yet... so that's why I would appreciate the quiet... keeps any buzz from affecting the price (+ or -)

BTW: what is your experience with options? Have you been successful? How aggressive are you?

At times I have been very successful an have also taken my lumps on some occassions. Options are very much different than trading stocks. They are easy to get into but can be hard to exit on occassion and you really should know something about them before trying to use them. I usually try to keep it to the basics of either buying calls or puts depending on my strategy with the trade. Sometimes I'll use them as insurance to hedge against a stock position I own moving in the wrong direction. Other occassions I will buy the calls or puts just to take a position in a stock either to the long or short side. You can leverage much more stock with less money with options than with just buying the stock. It depends on how I feel about the position and trade. The most important thing you must understand is that you must spend some time learning the moves an ins and outs of options before you take the plunge. Of course it's your money and you can do what you want but I would advise moving slowly and learning about the basics first. That site I mentioned will have everything you want or need to know from the basics for the beginner to the advanced strategies of an experienced trader.
I'm sensibily aggressive with my money and my trading. I never trade without a plan for my entry, target, an exit whatever instrument it may be. You must learn to do that until it becomes habit and second nature.
There are no shortcuts. Check that site out starting with the basic tutorials or free seminars and when you feel you understand the basics then try a couple of trades. Maybe run your ideas thru here first to see what some of us think of your strategys first before you make an option trade. Good luck.

[New-born baby]

Peanuts

NBB,

First of all, THANK YOU! Tuition for your school is pretty cheap... let's hope the education is not! ;^)

Here are my marginable securities:

FRGB
GFIG
DWCH
USLM (only 75% marginable though) and don't tell ANYONE about this stock- this one is MINE all MINE!!!!!!!
SIM
NSS
ZZ
MVCO (currently no position)
BAM (currently no position)

I do have a margin account with Ameritrade, and I can (and do) day trade.

How do companies account for options expense?

Thanks a million (I hope)

Peanuts:
Thanks for your post! I see by your answer that you are eligible to trade options.

I was asking about OPTIONABLE securities, which means stocks which have an option chain.
FRGB--no chain
GFIG--has one, but not an especially rich one (only a few months covered, not very much cash offered for an option)
DWCH--no options
USLM--no options
SIM--no options
NSS--just like GFIG
ZZ--none
MVCO--none
BAM--just like GFIG

The reason I asked for what optionable securities you held is so that you might want to start out making the very safest option play available: the covered call.

The covered call is where you sell the right (but not the obligation) to someone to buy your stock at a specified "strike" i.e. at a specified price.
Let's take a stock like NSS. Would you sell it for $50.70 a week from Friday?
I don't think NSS will be $50.70 by April 21. If it was, would you be happy if someone paid you $.70 per share now, and $50 on or before April 21 IF NSS was $50 or more?

Start by selling a covered call. You can take that money and, if you want, invest it in another stock right away.

I'll post more in a while.

[New-born baby]

Option Strategies

Have a stock that you just know is going to head to the garbage pile?
Here are some bearish option strategies that really work.

Bullish on a stock? Consider these bullish option strategies .

Know a stock that you think is just going to sit there? Then consider these neutral option strategies .

[peanuts]

Great!

Have a stock that you just know is going to head to the garbage pile?
Here are some bearish option strategies that really work.

Bullish on a stock? Consider these bullish option strategies .

Know a stock that you think is just going to sit there? Then consider these neutral option strategies .

Thanks NBB. I'm going to sift through the stuff you have given me here and I'll get back to you with any questions. Is there anything else that you think I should review?

[New-born baby]

Thanks NBB. I'm going to sift through the stuff you have given me here and I'll get back to you with any questions. Is there anything else that you think I should review?

I would just say this: if you are going to make any play other than a covered call, (i.e., selling a call on a stock you already own), then because of your inexperience I would enter a small position first. Make small moves until you gain confidence and experience.

I'll try to post some options plays from time to time.

[TFred]

Greetings,

NBB are you also selling calls on your oil positions?Would you consider giving an example,I would like to buy some XEC,with the possibility of selling some calls.Any thoughts?

cordially Tom

[TFred]

Greetings Again,

If you remember few weeks ago,LEA surged up to $20,I asked about buying May 22.50 puts since the stock was not shortable,its now trading at mid 16 level.Buying the stock along with the put would have been a safe hedge play since a possible Inverted SHS was present?

cordially again ,Tom

[New-born baby]

Greetings Again,

If you remember few weeks ago,LEA surged up to $20,I asked about buying May 22.50 puts since the stock was not shortable,its now trading at mid 16 level.Buying the stock along with the put would have been a safe hedge play since a possible Inverted SHS was present?

cordially again ,Tom

Tom,
If I read your post correctly, I would say---

If you buy the stock at (say) $20, and buy the $22.50 PUT, you really don't have any advantage because the put is going to cost more that $2.50.
The hedge would be to buy the $17.50 put at (say) $.50, and that just protects you from a disaster. You'll still lose money.

I myself would look for stock with very clear patterns, and play the option in the direction of the trend. For example, QQQQ is at quadruple top resistance. I bought the $45 JUN put because I think the QQQQ pulls back.

[Jim Smith]

You mean low cost way of speculating.......and I am speculating with VIX May 12.50 calls expecting the VIX to spike to 18+ near term.

[spikefader]

You mean low cost way of speculating.......and I am speculating with VIX May 12.50 calls expecting the VIX to spike to 18+ near term.

I like your strategy. The potential sure is there for VIX to do that.

[spikefader]

Peanuts; if I were you, I'd set up quotetracker free charting (www.quotetracker.com) and open up intraday charts for all those stocks you're interested in trading options for.

That way, you'll get a good idea of how the options move relative to the stock. You will see where there is an edge as far as support and resistance, and where you can afford to be patient and slow, and where you have to react quickly and not mess around. Sometimes you've just got to bite the bullet and get out. Remember, if you're long options, they are a depreciating product, and sometimes you just have to sell what you think is valuable for whatever the market wants to pay for them. Options often run opposite to what you think they should....so this is why I strongly strongly urge you to paper trade them for several months before you jump in and start selling call options. Newborn is a pro, and while he optimistically recommends you start by selling a covered call, I'd disagree and tell you to get your head around the basics first. Watch price action on enough of them and witness how they act relative to expiry, and volatility, and you'll be well off dude.

Be patient with your entries. I repeat; BE PATIENT. Let price come to you for your entries. And don't get greedy when trying to sell them. One must consider volume traded, and how significant the support/resistance is for the underlying. If it's a major support/resistance break, then your move will be more rewarding; especially when you have bought your options when no-one else wanted them. Or if you're selling calls, you wanna be selling them when everyone wants them and the price has been bid up to resistance areas....and then buy them back again when stock price has just about finished dropping to/approaching support levels...and nobody wants them. Supply/demand and where you are relative to the money are very important.

Few random thoughts there to help. Good luck.