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Thanks for your reply Ira,
I wish I understood what you did in your example better. I know that
options are not magic, but they can seem like magic when you have had
the experience of making a big mistake, like going long on a limit
down day, which happened to me. I have traded options either naked or
with futures contracts for 5 years. However, I've not traded many of
the spreads. I did one of those "free" trades once to lock in a
profit. As I said before I am looking into ways I can trade in a more
relaxed style. The problem asking questions about options is that
there are so many variables, and there are even more with futures
contracts.
I back tested the verticle spread idea that I asked about before. If
one waits for a good triangle or pennant to form they can make good
money. The bear and bull combo looks like it could be even better
because the loss is known and time is not as critical but I figure
that once the trade is made there will come a time when something
should be bought or sold. I'm still tryng to figure out what and why.
Prosper
--- In realtraders@xxxxxxxxxxx, Ira Tunik <ist@xxxx> wrote:
> There seems to be the opinion out there that there is some magic in
> options. A secret, that if it was only known, would be all things
to
> all people. I received another e mail from a guy named Crow who is
once
> again recommending the sale of naked puts as the answer to untold
> wealth. Prosper, there are dozens of answers to your question. I
will
> give one that I just got through using. I had a buy signal on a
stock.
> With that I also had a target price. when I reached my first price
> objective on the way to that target I sold the call at the strike
price
> just above my target price. When I reached the target price I
bought
> the put at that strike price to create the conversion and lock in
the
> profit on that trade. Yes I did give up some profit potential, but
now
> the money was in my pocket. I also Bought in the call that I had
sold
> which was for the near month and sold the call for the next month
out to
> increase my profit potential. I sold the time spread. Time spreads
are
> greatest at the strike price. If the price retraces, as I believe
that
> it will, then I will have increased my profit potential in the call
> area. When I have my next buy signal, I liquidate the put,
hopefully at
> a profit, look at my next target and adjust my call position
> accordingly. this is just one of hundreds of ways you can utilize
> options. Ira
>
> Prosper wrote:
>
> > Hi I have been thinking about Dom's suggestion. Seems that this
idea
> > may be a good one. How would a person manage the position after
> > entering it, for example if the security goes no place but
sideways.
> > Or if it breaks out stronly one way or the other. Or if there is
> > extreem volatility like the spoos have experienced over the last
> > year. Thanks for you input and thanks to Dom for suggesting this.
> >
> > Prosper
> >
> > --- In realtraders@xxxxxxxxxxx, "dom perrino" <domenick@xxxx>
wrote:
> > > I beleive that's a vertical spread Something I suggest you might
> > toss around
> > > that would be more conservative is to consider a bull spread
and a
> > bear
> > > spread at the same time(referred to as a box spread). In your
> > example you
> > > would sell one 106 call and sell one 106 put. You would also buy
> > one 105 put
> > > and buy one 107 call. . You have limited risk/limited reward,
> > provided you
> > > don't leg out of the bull or bear spread seperately.This is
based
> > on my
> > > knowledge as applicable to stocks. I have not traded futures in
a
> > few years
> > > If it works differently on futures someone will correct. There
are
> > numerous
> > > strategies regarding options, some of which are very complex as
> > seen here on
> > > recent discussions..
> > > Happy Holidays
> > > Dom
> > > ----- Original Message -----
> > > From: "Prosper" <brente@xxxx>
> > > To: "Real Traders" <realtraders@xxxxxxxxxxx>
> > > Sent: Wednesday, December 20, 2000 10:34 PM
> > > Subject: [RT] Options question for Ira and other options
experts.
> > >
> > >
> > > > Hi,
> > > >
> > > > I was thinking about an option play that would require that
you
> > buy one,
> > > at
> > > > the money put 3 to 6 months out. Then you buy 2 calls out of
the
> > money by
> > > > two strikes. Or vise versa (buying a call and 2 puts).
Example,
> > buy 1 June
> > > > 106 T-Bond call and buy 2 June 102 T-Bond puts.
> > > >
> > > > I don't know if there is a name for this kind of trade. I
would
> > like to
> > > hear
> > > > some of the pros and cons for this idea.
> > > >
> > > > Thanks,
> > > >
> > > > Prosper
> > > >
> > > >
> > > >
> > > > To unsubscribe from this group, send an email to:
> > > > realtraders-unsubscribe@xxxxxxxxxxx
> > > >
> > > >
> > > >
> > > >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxx
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