Options Trading
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I disagree. There's very little in a companies financial statements that would teach you how to trade options. Options trading is usually considered a fairly sophisticated strategy and something that I've avoided so far. Many people successfully sell call options, which basically allows the purchaser to buy your stock at a higher price in the future. Most people do it for income and usually hope that their stock is not actually called. But you have to be prepared to sell it if it is called.
Recently Derek Foster is pushing selling put options. This is sort of the reverse. Someone pays you money to obligate you to buy their stock at a future date. The person usually pays you money as a form of insurance. In the event of a large crash, they are guaranteed a price for their stock. The seller of the put, on the other hand, often wants to buy the stock anyway, and figures they can collect the income and if necessary buy it at a lower price than today's value. (But you may have to buy at at a significantly high price than the future market value.)
That is just a nutshell explanation and there are many potential landmines that I haven't gotten into. If you are really interested, I would look for books on the topic at the library. For me, at this point of time, it's not my kind of investment.
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1) this is not the right forum for discussing options. Other than myself and possibly one other person, no other experienced option traders have come forward here in recent months.
2) it is always the sellers of options who consistently make money, not the buyers. Studies show that the majority of novice option buyers who believe they are going to luck out with a trade or two will lose their money.
3) one can hedge one's sale of an option by buying a different option, but this requires an advanced knowledge of strategies and spread trading.
4) your broker should or will limit a novice option trader to selling covered calls, buying options, & selling the options that he alreadys owns.
5) every options trader needs to have fast, accurate math skills and a knack for problem solving. Long term success requires a strong and steady discipline. Too many novices with small accounts think they're going to pick up a hot tip and utilize leverage to gain huge profits. The high probability is that they're going to lose 100% of their money.
6) still interested? the best short guide to options trading is a well-written 50-pager available for free at the Montreal exchange website. It will take the reader from elementary startup definitions through black-scholes and binomial theory, and on to IV and the greeks. Here's the link:
http://www.m-x.ca/f_publications_en/en.guide.options.pdf
2) it is always the sellers of options who consistently make money, not the buyers. Studies show that the majority of novice option buyers who believe they are going to luck out with a trade or two will lose their money.
3) one can hedge one's sale of an option by buying a different option, but this requires an advanced knowledge of strategies and spread trading.
4) your broker should or will limit a novice option trader to selling covered calls, buying options, & selling the options that he alreadys owns.
5) every options trader needs to have fast, accurate math skills and a knack for problem solving. Long term success requires a strong and steady discipline. Too many novices with small accounts think they're going to pick up a hot tip and utilize leverage to gain huge profits. The high probability is that they're going to lose 100% of their money.
6) still interested? the best short guide to options trading is a well-written 50-pager available for free at the Montreal exchange website. It will take the reader from elementary startup definitions through black-scholes and binomial theory, and on to IV and the greeks. Here's the link:
http://www.m-x.ca/f_publications_en/en.guide.options.pdf
If this isn't the place to discuss options trading please point me in the right direction. I am eager to learn more about investment stategies. I am not the kind of person that wants to soley focus on one thing like say dividend stocks (as great as they are). I want to be able to use all tools available no matter how complicated they may be.
You have your opinion and I have mine. I disagree with your aforementioned opinion as well.
Learning how to read financial statements has helped me to invest in a company's option contracts well.
Learning how to read financial statements has not helped you to invest in a company's option contracts well.
Does that make you feel better?
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... but we learn to walk before we can run, no ?
options are complicated, tricky little creatures. Unless you have a stable portfolio and a secure foundation as an investor in common stocks bonds & mutual funds it's probably best to ignore options for the time being.
but in the event you already have the SP and the SF, your broker will permit you to sell calls against your long stock, aka writing (or selling) covered calls.
no point in discussing this strategy here. Hundreds of others have already been there, done that. The montreal exchange freebie whose link i gave you does a splendid job. Other excellent teaching modules prepared by the US options clearing corporation can be found on the cboe website, or on the corporation's own website.
there are no perfect option discussion forums. For some reason the subject seems to attract the worst kind of board troll. What one is likely to find are either a bunch of amateurs flailing around, or else a board like yahoo finance that boasts a couple of powerful pro posters (one is a former CBOE pit trader) who are so flamed down by repulsive board trolls that every now and then yahoo has to shut this forum and take it completely off the website for toxic waste removal.
interactive brokers used to partially support a US options forum that was probably the best of the lot. Believe it was called elitetrader.com. Haven't looked in couple years, won't have time next 2 or 3 weeks to check it out again, so if i'm wrong i'm sorry.
imo experience is going to be the best teacher.
options are complicated, tricky little creatures. Unless you have a stable portfolio and a secure foundation as an investor in common stocks bonds & mutual funds it's probably best to ignore options for the time being.
but in the event you already have the SP and the SF, your broker will permit you to sell calls against your long stock, aka writing (or selling) covered calls.
no point in discussing this strategy here. Hundreds of others have already been there, done that. The montreal exchange freebie whose link i gave you does a splendid job. Other excellent teaching modules prepared by the US options clearing corporation can be found on the cboe website, or on the corporation's own website.
there are no perfect option discussion forums. For some reason the subject seems to attract the worst kind of board troll. What one is likely to find are either a bunch of amateurs flailing around, or else a board like yahoo finance that boasts a couple of powerful pro posters (one is a former CBOE pit trader) who are so flamed down by repulsive board trolls that every now and then yahoo has to shut this forum and take it completely off the website for toxic waste removal.
interactive brokers used to partially support a US options forum that was probably the best of the lot. Believe it was called elitetrader.com. Haven't looked in couple years, won't have time next 2 or 3 weeks to check it out again, so if i'm wrong i'm sorry.
imo experience is going to be the best teacher.
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Does that make you feel better?
Rickson, I very much admire what you've done investing-wise. I've also looked at your investing strategy and find it interesting. I like examples of people who seem to be thinking "outside the box" and take a different path than the standard balanced portfolio.
Unfortunately, for some people, success (and particularly early success) seems to be accompanied with a type of arrogance and condescending attitude towards others. Not a healthy personality trait, in my opinion and diminishes someone who I otherwise feel is a valuable member of the forum.
Rickson, I very much admire what you've done investing-wise. I've also looked at your investing strategy and find it interesting. I like examples of people who seem to be thinking "outside the box" and take a different path than the standard balanced portfolio.
Unfortunately, for some people, success (and particularly early success) seems to be accompanied with a type of arrogance and condescending attitude towards others. Not a healthy personality trait, in my opinion and diminishes someone who I otherwise feel is a valuable member of the forum.
You disagree with my assessment on what I feel is necessary to do well with option contracts, yet admit that you have avoided options and that they are not for you.
I disagree with an individual's parenting techniques yet I have avoided having children and feel that they are not for me; this kind of logic makes sense to you?
Theres a good book available on derivitives trading I read recently, it explains the models dealers use for options quite well. It's called Traders, Guns & Money (Nothing to do with guns, it's not a novel) I forget the author, but if you are serious about derivitives (options, etc) then this is something you'll be interested in reading. It also explained the Black & Scoles model and other such things.
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You disagree with my assessment on what I feel is necessary to do well with option contracts, yet admit that you have avoided options and that they are not for you.
I disagree with an individual's parenting techniques yet I have avoided having children and feel that they are not for me; this kind of logic makes sense to you?
I don't disagree that one should read the financial statements. All I've said was I've never found information in there that would be sufficient to educate the average investor on all the ins and outs of option trading.
I disagree with an individual's parenting techniques yet I have avoided having children and feel that they are not for me; this kind of logic makes sense to you?
I don't disagree that one should read the financial statements. All I've said was I've never found information in there that would be sufficient to educate the average investor on all the ins and outs of option trading.
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couple good options educational resources:
US online broker Tradeking's website offers a lot. Here are many educational blogs & videos plus one or more forums for all levels of options traders from beginner to advanced. Most of these appear to be free for site visitors, not just TK clients. The combination of ultra-low commish & obvious dedication to client education makes one wistful. But they don't have a canadian subsidiary & they are not allowed to sign up canadian resident clients.
http://www.tradeking.com/p/home/tradeking/education/learntotraderookies.tmpl
mark wolfinger is a former CBOE market-maker who now devotes himself to options education. He recently joined Tradeking as one of their online experts, so his articles & blog pieces will appear on TK's website above. In addition mark maintains his own blog:
http://blog.mdwoptions.com/options_for_rookies/2009/12/index.html
interesting factoid: wondering who owns/controls privately-held Tradeking, I turned up the info that investors are the bluest of the option world's blue. President is one Donato Montanaro, while major investors include OCA Ventures, the investment arm of the remaining partners who led O'Connor and Associates, a major CBOE founder and pioneer of standardized option trading, plus members of the Quick family, founders of the innovative brokerage Quick & Reilly.
US online broker Tradeking's website offers a lot. Here are many educational blogs & videos plus one or more forums for all levels of options traders from beginner to advanced. Most of these appear to be free for site visitors, not just TK clients. The combination of ultra-low commish & obvious dedication to client education makes one wistful. But they don't have a canadian subsidiary & they are not allowed to sign up canadian resident clients.
http://www.tradeking.com/p/home/tradeking/education/learntotraderookies.tmpl
mark wolfinger is a former CBOE market-maker who now devotes himself to options education. He recently joined Tradeking as one of their online experts, so his articles & blog pieces will appear on TK's website above. In addition mark maintains his own blog:
http://blog.mdwoptions.com/options_for_rookies/2009/12/index.html
interesting factoid: wondering who owns/controls privately-held Tradeking, I turned up the info that investors are the bluest of the option world's blue. President is one Donato Montanaro, while major investors include OCA Ventures, the investment arm of the remaining partners who led O'Connor and Associates, a major CBOE founder and pioneer of standardized option trading, plus members of the Quick family, founders of the innovative brokerage Quick & Reilly.
You are not going to get a lot of love if you treat responses that gave you exactly what you asked for with ...
Determining the value of a company is a fundamental cornerstone of investing in options.
Even if an individual knew nothing about options, if they visited virtually any online financial site their first impression would be of a bunch of prices at a bunch of dates...
http://finance.yahoo.com/q/op?s=BKE
If the same individual knew that a business was worth $10-$12 right now, learning options becomes fairly straightforward.
Again, I'm speaking only for myself. Learning options may be more difficult for others who decide to avoid learning how to read financial statements.
Even if an individual knew nothing about options, if they visited virtually any online financial site their first impression would be of a bunch of prices at a bunch of dates...
http://finance.yahoo.com/q/op?s=BKE
If the same individual knew that a business was worth $10-$12 right now, learning options becomes fairly straightforward.
Again, I'm speaking only for myself. Learning options may be more difficult for others who decide to avoid learning how to read financial statements.
Is it me or is this thread missing the Xmas spirit?
I certainly appreciate all the information that was shared regarding my post and did not mean to sound belittling or however it may have came across. Just looking for more information...
I certainly appreciate all the information that was shared regarding my post and did not mean to sound belittling or however it may have came across. Just looking for more information...
happy holidays
ditto
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Merry Christmas!...that's right...I said Merry Christmas
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