posted
OK - I'm still foggy on the bottom/top part, but we'll skip that for now...
I went to both of my online brokerages, and see that I can place an order for options, but don't see where I would get the quotes to do so. Maybe this was on the 888options site...didn't see anything specific though?
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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Just look for a tab that says "Find Chain" -or something to that effect.
Then when you enter in a symbol like QQQQ it will pull up the latest option chain. Left side will be CALLS right side PUTS. The shaded part will be in or out of the money for CALLS and PUTS.
There should also be links to further out option chains, look for months like JUNE, AUG and so on.
Or even LEAPS, LEAPS are LONG term options contracts that may be years out ~
quote:Originally posted by Chart walker: .QQQRQ QQQQ JUN 43 Put
10 bought at $1.22 (about $1235.00 w/ commissions my cost)
NOTE: 1 contract of 10 would have cost you around $123.50 (I bought 10 of them) FYI.
Next question...why the $43 strike price? Is that what you are expecting it to do by June, or is that the price at which you are sure you will be well in the money?
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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quote:Originally posted by Chart walker: .QQQRQ QQQQ JUN 43 Put
10 bought at $1.22 (about $1235.00 w/ commissions my cost)
NOTE: 1 contract of 10 would have cost you around $123.50 (I bought 10 of them) FYI.
Next question...why the $43 strike price? Is that what you are expecting it to do by June, or is that the price at which you are sure you will be well in the money?
GREAT question!!
This is where the "Art of the deal" comes into play...
You can buy further out options, but it will cost you more because over time the market does average up, this is safer, but you won't make as much because you had to pay more, or,... you can play the more risky cheaper options that are due in a couple of weeks.
You can buy way "in the money, -but you will pay more, you can buy CHEAP way out of the money, -but is RISKY!
I've found through back testing that a 4-6 month out contract at an "extreme" or weekly turn point yields the safest, quickest return. Otherwise you will have about an 70-80% win ratio, which in getting 100% on your trades isn't bad, but I don't like to lose at all... ZERO, ZIP
So that's why I trade the way I do.
But, if useing a daily chart and flipping contracts, what I would do is find what indicators read the stock well (followed it) and then see how low or high this indicator had to go to form a daily "extreme" point.
Example, you will see how the MACD sometimes goes really low, or really high, line that up with a Stochastic indicator that LOW or HIGH "ALSO" and you should nail every trade in the short term.
That's basically what I do but in the lorger term, in the weekly charts...
Simple stuff really...
But printing out and READING how they back test is the whole game. Not EVERY MACD cross will be a winner, so FIND OUT WHY! Notice in the back testing how the crosses that are the LOWEST BELOW the centerline are the best ones that turn around and shoot upward.
Everything you need to know "IS IN the charts and indicators.
It's just a matter of understanding what they are telling you... Providing you are useing "good" indicators. A "good" indicator is simply one that tells you what you need it to tell you.
Like is money flowing in or out? -CMF
Over bought or over sold? -Stochastic
Are people Accumulating or dumping? -Accum/Distr.
They are all telling you something...
Play a game, print out randon charts (NOT pennys,cause they can be jerky) like the QQQQ in different time frames, pick out your favorite indicators and print out 10 of them. Try this with DAILY and WEEKLY charts.
Sit with a piece of paper covering 7/8 of the chart, pull the paper to the right and paper trade as you go. Write right on the chart buy in's and out's..
Once you feel comfortable "reading" charts you'll be able to burn right along and pop in and out like a pro! You'll see how the middle area is a gray area and how "extremes" are VERY predictable.
Sound's hard, but it's so easy ~
Just a matter of "seeing it" for the first time!
I do that game above all the time! Then guess on real stocks what's going to happen, you do this and you'll be hitting trades out of the park in no time.
"Who takes the time to do this?" -no one...
Yet once you do it you never have to do it again.... Closest thing to "easy money" I've ever come across!
Later Board! Gotta check on my BIGN stock! [yes that was a shameful plug! lol ~]
quote:Originally posted by Chart walker: Great question ~
Just look for a tab that says "Find Chain" -or something to that effect.
Then when you enter in a symbol like QQQQ it will pull up the latest option chain. Left side will be CALLS right side PUTS. The shaded part will be in or out of the money for CALLS and PUTS.
There should also be links to further out option chains, look for months like JUNE, AUG and so on.
Or even LEAPS, LEAPS are LONG term options contracts that may be years out ~
Looks like the cubes are falling like a hot rock! Love them indicators!! lol ~
Down over .20 as I'm writing this
OK, NOW I have questions about this chart...
The Full Stochastic appears to be headed downward for sure, but the StochRSI is very low and the PPO is near 0, also low. Wouldn't you be expecting the price to go UP and not DOWN?
Teach me, Obi Wan!
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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Accumulation is going down, Stochastic is negative and the Money is a big negative...
Nope, this one wasn't going to run with all that going on behind the scences IMO ~
The "cubes" are bouncing between 43.50 and 44.50 the Bulls want it to run, the Bears want it to tank, if interest rates go up buy as many puts as you can at, or near the money IMO...
We broke through a huge 44.31 support, next in line is: 43.51 42.86 41.77 40.05 38.41
Look back at the past to see what's ahead. The cubes are "jerky" a possible up day tomorrow might happen, but the major trend is down, indicators are down and the Jan - Feb run that occurs yearly seems to be fizzling out ~
Accumulation is going down, Stochastic is negative and the Money is a big negative...
Nope, this one wasn't going to run with all that going on behind the scences IMO ~
The "cubes" are bouncing between 43.50 and 44.50 the Bulls want it to run, the Bears want it to tank, if interest rates go up buy as many puts as you can at, or near the money IMO...
We broke through a huge 44.31 support, next in line is: 43.51 42.86 41.77 40.05 38.41
Look back at the past to see what's ahead. The cubes are "jerky" a possible up day tomorrow might happen, but the major trend is down, indicators are down and the Jan - Feb run that occurs yearly seems to be fizzling out ~
posted
OK, I would assume a "higher" PUT would be a higher strike price, like 44, which would put you closer to already in the money (so to speak), right?
Now - help me understand some math on the gain...using the example you posted a couple of days ago....
.QQQRQ QQQQ JUN 43 Put... bought at $1.22
NOTE: 1 contract of 10 would have cost you around $123.50
Let's say I bought 1 contract of 10, and in May, the price of QQQQ is at 38 even (for simplicity). Do I sell the option and make the difference between the cost I paid for the contract and the price I am able to get for the contract, or do something else and earn the difference between the 43 strike price and 38 strike price per share? (The way you do it anyway....)
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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Each contract is for 100 "option shares". So if the option is listed for $1, it will cost you $100 for a contract. I'm not sure if you got this or not since you were talking about 1 contract of 10...Chart bought 10 contracts with each being $123.50.
Basically, yes...you sell the contract and make the difference between what you sell for and what you bought for (minus commission of course)..just like a stock trade. You can hold the option and let it exercise if its in the money. You'll need the funds in your account though to buy the underlying stock (for a call option). I think most all options are sold though and not many are exercised.
Posts: 1028 | From: Georgia | Registered: Jul 2005
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quote:Originally posted by milliam: I'm not Chart, but I'll try to help out.
Each contract is for 100 "option shares". So if the option is listed for $1, it will cost you $100 for a contract. I'm not sure if you got this or not since you were talking about 1 contract of 10...Chart bought 10 contracts with each being $123.50.
Basically, yes...you sell the contract and make the difference between what you sell for and what you bought for (minus commission of course)..just like a stock trade. You can hold the option and let it exercise if its in the money. You'll need the funds in your account though to buy the underlying stock (for a call option). I think most all options are sold though and not many are exercised.
I thought each contract was for 10 shares, and Chart bought 10 contracts, which would total 100 shares (???)
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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posted
The amount of shares each contract holds I believe is 100 shares, so it would be 1000 shares if 10 contracts were bought...
That is why they are so profitable, 1000 shares at $40 would take you 40,000.00 to buy, but we can control $40,000.00 worth of stock for the strike price x10 or a fraction of that cost.
I'll look around tomorrow for a exact breakdown and how to word all of this with clearity...
Cause in reading this back it sounds confusing lol ~
posted
OK I am certainly in the confrused department. The other piece I am trying to figure out (and this is mostly lack of experience, I believe). You mentioned that on these extreme highs and lows that 100% return is reasonable. Using that number just as a ball park, since we all know there are no guarantees, basically would you say the price of a June PUT in May that is well in the money as these might indicate would cost $3 per contract, hence you double your money?
-------------------- Study before you buy, Sell before you think about it.... Posts: 3903 | From: Gulf Coast | Registered: Jun 2006
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posted
My Problem with options is picking the right one.... There are so many "Strikes" to pick on a stock I have lots of trouble..... Recently picked a CALL on walmart.... Within three days the stock went up .75 but my call option didnt move up enough to make any money... I still held out and by the sime walmart moved good... my CALL value was running out of time so... The It expired and I lost a little $$$$ ... There are so many strike prices to choose from ,,,, I get lost there.... If you choose the wrong one then later the volume on the Strike you choose may not let you sell?
Posts: 1101 | From: Georgia | Registered: Apr 2006
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posted
I agree with you Hitman, its hard picking the right one. The farther you get out of the money and the closer you get to expiration, the more risky the play. If the stock moves the right way, the right amount, you can make some big cash fast, but if the stock doesn't move at all or moves the wrong way, you can lose it all fast.
The safe bet is to buy near the money and buy some time (6 months or so, or even a LEAP). You won't make the big money fast, but you can make some safe money. I would keep the short term, out of the money (by a good bit) trades to stocks that you feel are going to move fast (like a bio stock waiting on FDA approval or something of the sort).
LEAPs are a great way of getting started in options. Over my options trading time, I've never lost on a LEAP and have averaged 100% gains on each of them. It takes some time though, so its not for the trader who likes to trade a lot.
Posts: 1028 | From: Georgia | Registered: Jul 2005
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I still really like trading the cubes (QQQQ) because of the safety, there's no watching for a bad PR cause it represents the top 100 stocks of the NAZ, and if one company gets weak it is replaced with the stronger.
What more could you ask for?
Strike price: That's everything, if you want to be safer, by IN the money, the further OUT of the money you buy the cheaper, but the more risk but the better the reward...
One might even contemplate buying 3 options when at an extreme high or low, one IN the money, one AT the money and one more OUT of the money.
Of course most of your money would be placed on the "safer" IN the money and AT the money, cause the OUT of money one will be the riskier but will cost less but produce the most....
This is why Options are more like Chess and not Checkers
With charting the cubes it's easy to make a little extra cash on a longer term hold, I like the 6 month range myself, -because of backtesting.
Go to the gallery page of QQQQ and look at what happened at the end of each year and what happened to the price 6 months later...
posted
WoW...Thanks guys.... Never played that way... will give it a try... with the QQQQ Gr8 Ideas :}
Posts: 1101 | From: Georgia | Registered: Apr 2006
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-Remember we are buying 6 month Puts at or just out of the money.
We have our first red candle after a 3 day run, Acccumumalation has rounded off, HEIGHT of the volume bars has been going down since about the middle of Jan., Stochastic RSI has been "hot" and Full Stochastic indicator CLEARLY in oversold area of it's indicator and due for a correction, and this is being confirmed by the other indicators (never run off of just one indicator IMO).
--Remember the OVERALL game plan here.
We divide our account into 5 parts, the first part we bought a PUT with already, we will buy a second Put today at or just slightly out of the money, and in 5 months sell them...
This little run is a nice little "gift" and in looking back at the 3 year history of the Cubes we see that this fluctuation at the extreme tops and bottoms happen, another great reason to NOT put all your eggs in one basket
This Put now has the probability of becoming our biggest gainer in 5 months
The last two years the "cubes" (QQQQ) have ran and then tanked in 6 months later. Take a look at the WEEKLY chart to see.
posted
Ok, now I'm going to let you in a a HUGE trick!
Learned the darn thing by accident!
Everyone and their mother knows a PUT makes money when a stock is going DOWN, and a CALL when price goes up...
But here's how to make a freaking TON of money with next to NO money! CHEAP!!!!
When you want to buy a CALL buy a PUT INSTEAD and sell it short!!! Or when you would buy a PUT, buy a CALL instead and short it!! WAY OUT of the money, the further the better! -the further the CHEAPER!!
--If you "sell to open" you are shorting it... Meaning it will make money when it does the opposite of what it is... Hence, I shorted CALL will make money when it FALLS in price! -or a PUT will make money when the price goes up!
Why does this make TONS of money?.... SUPER CHEAP CONTRACTS!!!!!!
While the "crowd" is buying PUTS you are buying CALLS and "selling to open" because you can buy them for CENTS!!
Here are two examples that I'm in right now... The first is NEAR the money the second was the WAY out of the money as far as I could go!
.QQQFV QQQQ JUN 48 Call --current price $44.41 -10 for $0.59 (my cost $590.00) [10 contracts] they are selling for 0.5 or ($500.00) Profit of $90.00 Almost 20%!
NOW look at this ONE!!
.QQQFZ QQQQ JUN 52 Call -20 for $0.05 or (my cost $100.00) [That's 20 contracts!] 0.04 = ($80.00) Profit of $20.00 -or 20%!!
ONLY $100.00 bought "20" CALLS that "sold to open" -that's what the "-" in front of the contract number means... In otherwords, I could buy CALLS WAAAAAAY out of the money CHEAP!!! In fact buy the ones that are the FAREST out that you can!!! And SHORT them and make money!
What a trick huh?!!
Clearly you can see that even a little bit of money can make you a TON with this "trick!"
---now the catch... "The Rich" (the powers that be) KNOW this too...
They have set up "requirements" now which must be met in order to short a Option contract, otherwise EVERYONE would do it! 1) you must have at least $10,000.00 in your account, some are more then others... ($50,000.00 for an Index Option).
2) you must have Margin
3) level 5 trading account status...
For those who really what to get on the fast track, there is your blue print and directions! But for this thread I'll keep to the basic straight CALLS and PUTS from now on but wanted to make mention of this powerful Trick...
I'm only too Happy to share this TRICK/info with you all. Should someone pop a Million Buck$ with this please let me know of your Bessing!! Hard times have fallen on my family and the health thereof, so I am not able to do anything mysely yet... --but I feel this knowledge should be shared...
Actually, I may not get to use this info for a long time as I'm contemplating going to seminary school to become a Pastor
posted
Those puts are looking really good Chart...congratulations. I was really looking for the AROON to cross with a negative money flow, but I'm guessing that isn't going to show up until its too late.
Shorting options sounds really interesting, but I'm going to have to do a bit more thinking on that one. Let's see if I get this...you buy a contract of XYZ for .05 (-$50), then you sell that short at .05 (+$50) and then hope it expires worthless?
Sorry to hear of your family troubles. I hope better days find yall soon. Good luck on the seminary school as well, if you decided to go that direction.
Posts: 1028 | From: Georgia | Registered: Jul 2005
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quote:Originally posted by milliam: Those puts are looking really good Chart...congratulations. I was really looking for the AROON to cross with a negative money flow, but I'm guessing that isn't going to show up until its too late.
Shorting options sounds really interesting, but I'm going to have to do a bit more thinking on that one. Let's see if I get this...you buy a contract of XYZ for .05 (-$50), then you sell that short at .05 (+$50) and then hope it expires worthless?
Sorry to hear of your family troubles. I hope better days find yall soon. Good luck on the seminary school as well, if you decided to go that direction.
Thx, change is certain! Nothing stays the same The BEST advice I can give anyone about options is to actually trade in a "virtual" account, see what happens LIVE. At Optionsxpress . com you can open an account FREE and have all the benefits the site has to offer!
Open a Virtual account under "Tools."
There is also a LIVE WINDOW that you can use during trading hours to answer all your questions, talk with a REAL PERSON...
You can place $1 million dollars in your virtual account and set your trading level at any level. Buy all kinds of options and make note of what and how they do in REAL TIME. You will virtually buy and sell and see orders filled or still open.
IMO a virtual account at Optionsxpress is a MUST!
Test drive for FREE!! And use all the tools and scanners and CHARTING TOOLS free!!! LOL ~
Can't beat that with a stick! -------------------------- .UQQRS QQQQ JUN 45 Put 10 $1.30 $1,300.00 2.08 $2,080.00
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