Favourite Options Strategy

[positivecashflow]

What is your favourite options strategy? Do you like to keep it simple or do you employ complex strategies?

Cheers,

J.

 

[Bingo]

What is your favourite options strategy? Do you like to keep it simple or do you employ complex strategies?

Cheers,

J.

positive,

I tend to be conservative with options. My favorite startegy has been to select a share that I think is trending upwards and sell in the money puts. They also need to be shares that I would be happy to hold. I tend to hold the options until expiry or delivery. This has worked well for me and is best in a steady or slowly rising market In the recent past the market has moved a bit fast for me in some of the stocks I like have risen well above prices that I am happy to deal. When this happens I take the money and move on to other shares.

If I need to take delivery I then sell calls against the shares. Sometimes I end up being in and out of the same share a number of times a long period of time.

The risk is a large fall in a share which makes selling the calls to make a profit on the transaction difficult.


Bingo

 

[positivecashflow]

The risk is a large fall in a share which makes selling the calls to make a profit on the transaction difficult.

What about buying a long term put on the share you hold to minimise this risk?

Cheers,

J.

 

[still_in_school]

Hi PositiveCashflow,

honestly i prefer to buy long puts or calls, but be able to on sell them, a few days later or in a very close time period... i just dont like the time decay, and try to minimise that risk potenital.

Cheers,
sis

 

[positivecashflow]

SIS,

What is your opinion of spread strategies using options?

Cheers,

J.

 

[JetDollars]

My favourite so far:

1. Buy Shares
2. Write Calls (monthly)
3. Buy puts (yearly)

 

[Bingo]

My favourite so far:

1. Buy Shares
2. Write Calls (monthly)
3. Buy puts (yearly)

JetDollats,

Have you been reasonably successful? Is it worthwhile in your opinion?

Bingo

 

[crashy]

I prefer to write long dated ATM straddles, 3-6 months out. This safely gives me a return of around 100% p.a.

I always get burnt when I write naked options so I dont do it.

 

[wayneL]

Heya Crashy,

Long time no see! (Ever since you banned me from your forum for asking awkward questions. LOLOL)

Cheers
Wayne

 

[crashy]

"asking awkward questions"

you mean argumentative, egotistic and childish behavior?

:cwm10:

 

[wayneL]

"asking awkward questions"

you mean argumentative, egotistic and childish behavior?

:cwm10:

That is an interesting accusation coming from you Crashy.

As I recall, it was a discussion much like the one on the other thread. I disagreed with one of your statements and wanted to discuss.

But you obviously didn't like being questioned in front of you "pupils"...it doesn't do much for your guru status eh?!

 

[positivecashflow]

My favourite so far:

1. Buy Shares
2. Write Calls (monthly)
3. Buy puts (yearly)

Here is an even better one for you Jet$ (though its for the US market):

1. Buy Single Stock Future (allows you to control 100 shares at 20% margin - see www.onechicago.com)
2. Buy ATM Put
3. Find and Sell an OTM Call for the same price as the cost of the Put
4. Equals Risk free trade

Cheers,

J.

 

[crashy]

Thats not really risk free, as the delta of the put would be less than one. But there is nothing stopping you from compensating by doing a ratio. Also there is the issue of risk margin. Its basicly a synthetic short combined with a long future. Also it is not possible to sell an OTM call for the same as an ATM put. For this to work div yield must be zero and time to expiry must be 100+ days. Thats a long time to wait when the profit will either be small or nothing at all.

 

[SuperTed]

I think he is ignoring you now Wayne ;-)

Anyway I always trade naked, sometimes i wear clothes but thats no fun.

I wait till a large rise or fall on xyz and then write against the trend above or below support levels.

Writing options with the trend i found to be very limiting in regards to prem recieved.

Emotional control rules over any strategy though (to me thats the cornerstone of any trading)