yoda Posted November 17, 2006 Posted November 17, 2006 Re: Fund watch: Emerging Markets Yoda, am curious to learn more about successful options trading. Thats one area where i make consistent losses. Do u write option contracts or do u purchase contracts ? If you are a successful options trader, am curious what strategies u use ? As far as i can tell, only guys who write contracts make money. People who play with small money almost always have to write naked options, which is a big risk, IMO. From what i researched, most of the advanced options strategies recommended by experts, involve hedging, such as: Straddles (Simultaneous Call & Put), Call spreads (sell a lower strike price call & buy a higher strike priced call). But even for these, there is a big probability factor involved, which makes me nervous. Both BIDU & GOOG are examples of stocks, where a straddle may fetch u a guaranteed return after an earnings report, as both dont stay the next morning. If the market remains bullish, i plan to straddle (small sum of money) Google, Baidu just before every earnings report. I am currently a paper-trader in the options world. I am pursuing 3 different strategies: a) day trade SPX options looking for a 0.50 cent increase. will trade a call or put depending on what the real-time chart says (i use bollinger bands and candlesticks on multiple timeframes). i am typically done before i go to work (9:30am PST). expected gain $500/day per 8k-20k invested, max loss (mental stop loss) - $1000/day. this is based on 10 contracts. one can increase/decrease to suit their convinience. so far results are good. i am losing once for every 7/8 successful trades. b) sell iron condor (sell 1 SPX bear call spread, 1 SPX bull put spread). c) out of the money (cheap) straddle before earnings on stocks which have a high tendency to move after earnings (not a GOOG 20 point move on a $400 stock, rather a RHAT 5 point move on a $30 stock). these have to be calculated on a options theoretical price calculator (by moving price/timeframe/volatility) to see how much the stock has to move to make money. right now, i am working on a (java) program to scan earnings.com and identify optionable, high moving stocks (after earnings) to look for potential opportunities in an automated way. given my laziness i expect that project to be completed in a year. I have been paper trading forever (1-2 years), but seriously only the last 2-3 months. I don't expect to put any real money for another 3/4 months. BTW, there is a thread on elite trader which talks about SPX spreads. There are some experts there. Here is the thread: http://elitetrader.com/vb/showthread.php?threadid=49586 I also bought this $15 booklet from this site (was referred to by someone else) which talks about the iron condor strategy: optionslinebacker.com I have found it to be quite useful, although it is a painful process to learn as you can trade only twice a month (1 call spread and 1 put spread).
Bumper Posted November 17, 2006 Author Posted November 17, 2006 Re: Fund watch: Emerging Markets What software do u use to pick stocks & determine entry points ?
yoda Posted November 17, 2006 Posted November 17, 2006 Re: Fund watch: Emerging Markets I use investools and fidelity stock screener.
Bumper Posted November 17, 2006 Author Posted November 17, 2006 Re: Fund watch: Emerging Markets Did u take that $3K investools course ? Apparently they dont give out the tools without taking their course ? Was the course useful ?
Bumper Posted November 17, 2006 Author Posted November 17, 2006 Re: Fund watch: Emerging Markets And BTW, i do think theres a HUGE difference between paper trading & real trading. There are some risks u simply wont take in reality, that u may be willing to in a paper trade. Now that i know how u have been trading, I understand why u are talkin about options trading. When u stomach a couple of losses ur outlook will change.
yoda Posted November 17, 2006 Posted November 17, 2006 Re: Fund watch: Emerging Markets Did u take that $3K investools course ? Apparently they dont give out the tools without taking their course ? Was the course useful ? Yes, I did. It opened my eyes as to how much we need to learn before putting our money in the market. I have recovered what I have spent but I haven't done better only because I haven't spent time consistently.
gator Posted November 17, 2006 Posted November 17, 2006 Re: Fund watch: Emerging Markets thts y Bumps, I had suggested tht the only way u will learn is by getting ur hands dirty... u will simply not have the motivation to research and dig info, unless it is cold cash at stake....
Bumper Posted November 17, 2006 Author Posted November 17, 2006 Re: Fund watch: Emerging Markets thts y Bumps' date=' I had suggested tht the only way u will learn is by getting ur hands dirty... u will simply not have the motivation to research and dig info, unless it is cold cash at stake....[/quote'] Yoda, am sure will have an entirely diff opinion about options, once he starts trading with his REAL money. The most important difference is emotions When u are playing with paper cash of say $10K, u start with a few bad trades & u are down to $5K, u will still go for it & might make up ur losses in subsequent trades. But when u are playing with real money its a diff story. U will likely walk away after a $5k loss. The key to trading is, u need to keep doing it to recover ur losses. For that u need plenty of capital & a BIG stomach for losses.
yoda Posted November 17, 2006 Posted November 17, 2006 Re: Fund watch: Emerging Markets bumps, some reading material for your from a guy who has moved from paper trading to real life trading: http://simplyoptionstrading.blogspot.com/2006/10/secrets-of-options-trading-champion.html
Bumper Posted November 17, 2006 Author Posted November 17, 2006 Re: Fund watch: Emerging Markets In the meantime, NMX makes a blockbuster IPO. $133/share on opening day.
Dhondy Posted November 18, 2006 Posted November 18, 2006 Re: Fund watch: Emerging Markets I never put a penny in the stock market or MFs. Don't trust it. Whatever little I have, first goes in Tax free instruments (National Savings & ISAs in the UK), and if I have any left, in Fixed rate Bonds. I know I'll never make a killing, but I can't ever face the prospect that I lost money through excessive greed that would have secured my son's future.
Bumper Posted November 19, 2006 Author Posted November 19, 2006 Re: Fund watch: Emerging Markets I never put a penny in the stock market or MFs. Don't trust it. Whatever little I have, first goes in Tax free instruments (National Savings & ISAs in the UK), and if I have any left, in Fixed rate Bonds. I know I'll never make a killing, but I can't ever face the prospect that I lost money through excessive greed that would have secured my son's future. Do they have an equivalent of pension plan or 401K in the UK ? How are your contributions in such a plan invested ?
Dhondy Posted November 19, 2006 Posted November 19, 2006 Re: Fund watch: Emerging Markets Yeah, we have an employer's pension scheme. Since I work for the National Health Service, this is underwritten by the government. We pay 6% of our basic salary into it, and the employer adds another whack. It doesn't matter to us how it's invested, as we'll have a guaranteed pension based on our final salary when we retire. Unlike private pension schemes, the government will make good any shortfalls accrued through investment failures, etc.
Bumper Posted November 19, 2006 Author Posted November 19, 2006 Re: Fund watch: Emerging Markets In the US its a bit different. There is a plan called 401K. Every year u can invest up to a fixed TAX DEFERRED amt ($15K for 2006). Employers match a portion of it (not all do). The money is typically invested in mutual funds (u can also invest them in conservative bonds or savings accounts). U get to manage/pick funds yourself from a fixed list of funds ur 401K provider allows. When u retire u can take out your returns fully or on a monthly basis. Historically US stock markets have always headed up significantly, over a 30 year window (short term down turns not withstanding). Hence u end up making significant money by staying invested.
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