Hi Ben, I have bought and sold calls and puts
Post# of 41413
Posted On: 05/12/2014 2:29:28 PM
Hi Ben,
I have bought and sold calls and puts and I have written options on single stocks and ETFs. Buying a call or put and then selling it for a profit is much like buying a lotto ticket. Now buying out of the money call options on the SPY that are three months out, when say congress agrees on spending, debt. etc the odds are better than a lotto ticket. But waiting for major news items to come along may not be your style. Buying puts against bad news, like Boeing and their Dreamliner, BP and its oil spill, Walmart and its troubles in Mexico can be much better than a lotto ticket. But again, waiting for bad news may not be for you.
I too work full time, live opposite the the side of the country where the market is located, and my job puts 25-30 people in front of me all day demanding my attention so I cannot have lots of money on the line and be ready to act. My most success has been in options writing. I write credit spreads on SPY, GLD, IWM, QQQ that have between 60-90 expiration which means I normally look at the market three times a day and have cell phone text alerts if the black swan comes by. If I hit a particular % gain vs (news, momentum direction, COT report, etc) I close out my spread and repeat. I have tried weekly spreads. Those require a closer eye and I did not enjoy the stress.
The option writer can make money in a flat moving stock/ETF. The option buyer MUST pick the right direction and the % gain. The option writer just needs the stock/ETF to not close above/below a price. The buyer must hit a particular price and/or trend.
The option writer is the bully, he plays keep away. The option buyer runs after the ball. The option writer can fry a larger amount of money vs what they could win. But the writer has a much higher probability of winning that low gain. The options buyer, lower risk higher gain, but much lower probability of winning.
I hope that helps some.
I have bought and sold calls and puts and I have written options on single stocks and ETFs. Buying a call or put and then selling it for a profit is much like buying a lotto ticket. Now buying out of the money call options on the SPY that are three months out, when say congress agrees on spending, debt. etc the odds are better than a lotto ticket. But waiting for major news items to come along may not be your style. Buying puts against bad news, like Boeing and their Dreamliner, BP and its oil spill, Walmart and its troubles in Mexico can be much better than a lotto ticket. But again, waiting for bad news may not be for you.
I too work full time, live opposite the the side of the country where the market is located, and my job puts 25-30 people in front of me all day demanding my attention so I cannot have lots of money on the line and be ready to act. My most success has been in options writing. I write credit spreads on SPY, GLD, IWM, QQQ that have between 60-90 expiration which means I normally look at the market three times a day and have cell phone text alerts if the black swan comes by. If I hit a particular % gain vs (news, momentum direction, COT report, etc) I close out my spread and repeat. I have tried weekly spreads. Those require a closer eye and I did not enjoy the stress.
The option writer can make money in a flat moving stock/ETF. The option buyer MUST pick the right direction and the % gain. The option writer just needs the stock/ETF to not close above/below a price. The buyer must hit a particular price and/or trend.
The option writer is the bully, he plays keep away. The option buyer runs after the ball. The option writer can fry a larger amount of money vs what they could win. But the writer has a much higher probability of winning that low gain. The options buyer, lower risk higher gain, but much lower probability of winning.
I hope that helps some.
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