Any option writers out there?

[jackson8]

hi all

am interested if anyone is familiar with louise bedfords book

the secret of writing options

any reviews would be appreciated and if anyone has a copy they would like to sell

the bookshops where i live dont carry any trading books at all and i know i can purchase from here but would like a bit of feedback first if possible

with thanks
gary

 

[russtak]

Hi Gary
I have read the book it but I think it is targeted at purely an introductory level. For example it describes the greeks in a few lines and volatility gets less than a page. I think 'Options as a strategic investment' would be a better buy.
tks Russell

 

[jackson8]

Hi Gary
I have read the book it but I think it is targeted at purely an introductory level. For example it describes the greeks in a few lines and volatility gets less than a page. I think 'Options as a strategic investment' would be a better buy.
tks Russell

yeah i happened to find a copy and have bit of a read , i agree very basic and not what i am really looking for.

something of an intemediate nature would be more helpfull, will see what i can find of the above that you have mentioned on the internet.

i have no access to what may be classified to a proper bookshop where i live

will have another look at the forums book site and see what i can find

thanks

 

[cutz]

G’Day Gary,

I can vouch for the book that russtak mentioned, it’s pretty much covers basic concepts right up to advanced strategies. I got my copy from Borders (only because I had a 30% discount voucher) but www.moneybags.com.au stock it cheaper than the list price at borders.

I can also vouch for moneybags online bookshop, they have a pretty efficient service and their prices are competitive, I purchased 2 other McMillan books and Natenberg’s Option pricing and volatility (which is also a good read) from them.

 

[jackson8]

G’Day Gary,

I can vouch for the book that russtak mentioned, it’s pretty much covers basic concepts right up to advanced strategies. I got my copy from Borders (only because I had a 30% discount voucher) but www.moneybags.com.au stock it cheaper than the list price at borders.

I can also vouch for moneybags online bookshop, they have a pretty efficient service and their prices are competitive, I purchased 2 other McMillan books and Natenberg’s Option pricing and volatility (which is also a good read) from them.

hi cutz
thanks for that

do you have both books : Options as a Strategic Investment and Options as a Strategic Investment, 4th edition: Study Guide

just wondering whether the first is more theory based while the study guide is more of practical application

not really up for purchasing both , not sure which one would be more applicable for a newbie

but i take it the study guide goes hand in hand with the other
thanks
gary

 

[cutz]

hi cutz
thanks for that

do you have both books : Options as a Strategic Investment and Options as a Strategic Investment, 4th edition: Study Guide

just wondering whether the first is more theory based while the study guide is more of practical application

not really up for purchasing both , not sure which one would be more applicable for a newbie

thanks
gary

Hi Gary,

I haven't got the study guide, just Options as a Strategic Investment itself.

The other 2 I have are Profit with options and McMillan on options.

I reckon you go for the first book as it's lays down some solid grounding, I’m not sure what the study guide consists of, I probably wouldn’t bother with it unless someone suggests otherwise.

 

[Grinder]

You can find alot of good free stuff on the net as you know. Have attached one below as a starter.

View attachment Lawrence G. McMillan - Profit with Options (Essential Methods for Investing Success).pdf

like the texts Cutz mentioned, anything by McMillian or Natenberg would be my picks. Also attached View attachment cws.pdf it's an intro to Cottle, can do you head in a bit though.

 

[jackson8]

You can find alot of good free stuff on the net as you know. Have attached one below as a starter.

View attachment 29484

like the texts Cutz mentioned, anything by McMillian or Natenberg would be my picks. Also attached View attachment 29485 it's an intro to Cottle, can do you head in a bit though.

thanks cutz and grinder

you have probably saved me few hundred dollars with your help
more than a lifetimes read i think
much appreciated
gary

 

[cutz]

G'Day fellow option traders,

How far into the session can i close out a just ITM call to avoid assignment,
i'm holding out till closer to 4 as it looks like the stock in question is fading.

Any thoughts?

 

[sails]

G'Day fellow option traders,

How far into the session can i close out a just ITM call to avoid assignment,
i'm holding out till closer to 4 as it looks like the stock in question is fading.

Any thoughts?

Hi Cutz, I believe you have until the options market closes - but not sure if it's broker specific. Maybe someone else can confirm...

 

[cutz]

Thanks Sails,

Funny it looks like i've jinxed myself, there was a reversal on WBC as i was posting my question.

 

[sails]

I'm sure you would be aware that the closing auction can gap - especially on expiry close, so watch that gamma! Also, if WBC closes within a cent or two of your strike, it usually pays to close it out rather than risk assignment. It's not as likely, but has been known to happen. You should have 10 minutes after the closing auction, but can be difficult to get a decent price the closer it goes to 4:20.

If it's going to gap - hopefully it will gap down

EDIT: I should have qualified the statement about it closing within a cent or two of your strike - I meant if it closes a few cents OTM. Obviously if it's even slightly ITM, the risk of assignment becomes pretty high!

 

[cutz]

Thanks Sails,

Yep you were 100% correct, i actually closed out at 415pm 8cents above intrinsic. I received a bit of a fright as I thought I wasn’t going to get filled.

Handy lesson for next time.


EDIT>>BTW it was actually the 20 strike, it was just ITM this morning but gamma got me in the end.

 

[sails]

Thanks Sails,

Yep you were 100% correct, i actually closed out at 415pm 8cents above intrinsic. I received a bit of a fright as I thought I wasn’t going to get filled.

Handy lesson for next time.


EDIT>>BTW it was actually the 20 strike, it was just ITM this morning but gamma got me in the end.

Oh OK - I thought it might have been the 20.5 -hence the comments about expiring close to the strike.

Yes, it is scary closing out so late on exp. day. The MMs know you gotta deal - they know you don't want to be assigned. Personally, I don't like being short going into expiry unless they are well out of reach. In fact, I have sometimes bought cheap longs or debit verticals in the last few days before expiry if there looks to be potential of a decent move into expiry. If you lose, it's a very small loss, but if you win, it can be a bit of cream on the cake!

 

[cutz]

Hello again,

I thought I’d mention why I was holding a position with such high gamma risk so close to expiry(an example of what not to do). Two days ago I intended to close out my WBC calls for a tidy profit, unfortunately I was rushing as I normally do, and I accidentally entered my order on the pad as a sell to open instead of a buy to close.

Chart action on WBC looked like a reversal was taking place so I thought I'll let it ride, who would have thought especially after a bad night on the US Westpac would have turned back up.

Funny thing today I made the same error in reverse, opened some positions into May, (diagonal roll) buying to open instead of sell to open which I then quickly reversed. I think the vibe has taken a three day holiday.

There you go folks, another example on why short positions should not be held to expiry, especially when there’re trading ATM or close to the money.

 

[sails]

Cutz, sounds like it was an expensive mistake this time. Don't worry, I have had my share of ordering mistakes especially while learning. I think I have mentioned before how I painstakingly put on a double butterfly (6 legs to the trade) one leg at a time, working the prices to get the best fill etc only to find I had done it on BHP instead of NCP. Although NCP had much higher IV, so I ended up paying more for the entire position in BHP than originally estimated. At the time both were ironically trading at exactly the same prices and were tracing out similar intraday patterns. That led to a checklist taped to my monitor to help prevent future mistakes of that nature.

Anyway, below is a snapshot taken of WBC option exercises this morning. There were quite a number of puts and calls exercised at the 20.50 strike which is exactly where WBC closed yesterday. A place where some might think they were safe from assignment.

 

[cutz]

Yep, it was pretty costly.

I should stick warning sign on the wall, i've done that same mistake about 4 times now, you think i would have learnt by now.

Interesting with all the $20.50 assignments, highlights the issue with pin risk as it could go either way.

 

[cutz]

BTW Sails,

How did the NCP butterfly go in the end, hopefully not a loss like my mistake.

 

[sails]

BTW Sails,

How did the NCP butterfly go in the end, hopefully not a loss like my mistake.

It ended up being a BHP double fly (eg call fly above and put fly below). I got freaked out because I had a lot more invested than originally estimated due to BHP's IV being a lot less than NCP's. I didn't pick it up as I was entering one leg at a time. (One of the reasons I now prefer to enter these complex positions as an entire spread order with a limit price.)

Yes, I did lose money from it - I reckon it was a case of fear clouding the judgment plus a lot of inexperience in option trading. BHP went screaming up to the top of my highest long calls (I was scared of losing the entire debit if it kept going up), so I closed out at a loss and thankful (at the time) to have preserved some of the initial debit. Then BHP turned around and went rapidly all the way back down to the lowest long puts.

So, with the privilege of hindsight, if I had closed out the winning parts (eg the put credit and call debit) on those highs instead of closing the lot and leaving the bearish ones in there, it actually would have done very well. I was just scared I was throwing good money after bad at the time!

 

[Grinder]

I didn't pick it up as I was entering one leg at a time. (One of the reasons I now prefer to enter these complex positions as an entire spread order with a limit price.)

hear ya there.. very difficult to leg in, too much left to chance. Much prefer to spread it as a whole, minimizing the chance of mess ups.