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Any options/derivatives trader here?

Discussion in 'Other Off Topic Forum' started by bubba, Feb 10, 2004.

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  1. bubba

    bubba Formula 3

    May 8, 2002
    1,025
    Hong Kong
    Full Name:
    PPPP
    #1 bubba, Feb 10, 2004
    I am sure most members here own stocks/mutual funds. I do too. I just started trading some stock options (we call them warrants out here), and man, do they gyrate wildly even in a mild day.

    I understand their riskiness, and just would like to know from you more experienced traders any tips on trading successfully with options/derivatives. Any good website and/or books to recommend? Thanks!
     
  2. normhuff

    normhuff Formula Junior

    Dec 14, 2003
    716
    Peoria, IL
    Full Name:
    J. Norman Huff, Esq.
    #2 normhuff, Feb 10, 2004
    "Getting Started in Options" by Michael C. Thomsett. Once you trade options, you'll never want to trade stocks again. My personal favorite strategy is selling the time value of puts for blue chip American stocks. Don't write covered calls against a position that you're not willing to sacrifice/sell. Start with covered calls trades, since they are the easiest to understand for beginners. Time is your greatest ally and worst enemy. I'd save buying calls/puts for later on once one thoroughly understands the risks. Naked calls, spreads, straddles, strangles, etc. are some of the last things I'd recommend trying for beginners. A couple more pieces of advice I'd recommend are don't get too greedy. Once your buy/sell target hits, go for it, i.e., know what your goals are for each trade. Plus what's most important for beginners...if you can't sleep at night because you're thinking about what's going on with your trades, then get out altogether, since this type of trading's not for the faint of heart. That's my 'pinion...
     
  3. bubba

    bubba Formula 3

    May 8, 2002
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    #3 bubba, Feb 10, 2004
    Thank you, Normhuff, for your advice. How does one sell covered calls through an online brokerage? I suppose you need to have the underlying stocks to do so, right? I hope I can do the same out here. The options here are mostly European style, which means the option holders can't exercise them until maturity date.

    I suppose option buyers typically don't exercise them, unless they got the contracts at very low prices and the strike prices are heavily in their favor?
     
  4. Kyle Madan

    Kyle Madan Karting

    Jan 20, 2002
    75
    #4 Kyle Madan, Feb 10, 2004
    Haven't been so active in the last year, as I am very busy with grad school, but I used to trade a lot of options and derivatives.

    www.optioninvestor is a great site for US markets and general education. It's fairly pricey, but I think they still have a one month free trial.
     
  5. bubba

    bubba Formula 3

    May 8, 2002
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    Hong Kong
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    PPPP
    #5 bubba, Feb 10, 2004
    Thanks, Kyle! How was it when you traded?
     

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