Giving options a go

[del444]

Recently I have gained an interest it options in addition to my normal share trading which I currently most do on the US Markets thought Interavtive Brokers. Some questions:
- Any good books to read? Have read a number of pages via Google and the last 5 pages of this forum, and most of the books on Amazon that are rated highly seem to have fake reviews or are very basic. Any must reads out there?
- Any recommend traders which good iPad software? I find IBs iPad app to not be great for trading options and easily seeing the price at different strike points.
- In regards to closing trades I have read a lot on here about just selling the position rather than exercising the option, as you don't need the liquidity. Is this was most do? I can see the benefit here of having more option positions, I guess this would work well on a stock with a liquid options market.
- Finally does anyone know if IB automatically exercises the option if it's ITM and the liquidity is in the account?

 

[cutz]

- Finally does anyone know if IB automatically exercises the option if it's ITM and the liquidity is in the account?

Most brokers including IB auto exercise but just to be sure I would punch in a request prior 430pm.

 

[del444]

Most brokers including IB auto exercise but just to be sure I would punch in a request prior 430pm.

Done some more research here and it appears about 3 days out they give the the option to select it to be automatically exercised.

 

[John159]

Are you talking about real options or just binary options?

 

[gkh]

Are you talking about real options or just binary options?

"Macmillan on Options" by Lawrence McMillan Wiley 2004 is good for US markets provided you already know the basics.

The CBOE education site has excellent basic information on option trading.

This attachment is also a good intro.

 

[hamli]

...
- In regards to closing trades I have read a lot on here about just selling the position rather than exercising the option, as you don't need the liquidity. Is this was most do? I can see the benefit here of having more option positions, I guess this would work well on a stock with a liquid options market.

How is your trading coming along?

- realise that as you approach expiration, your gamma risk increases and your positions P&L can significantly change in a short time frame. A lot of people close trades prior to expiration because of this; You may also want to weigh the costs of closing vs being assigned. From experience, I believe it's cheaper to be assigned in IB than closing out compared to other platforms.

 

[del444]

How is your trading coming along?

Its been quite enjoyable. Doing some shorter term options and well as setting some longer term ones as well.

The only thing I am not overly liking is my trading platform Interactive Brokers. I have finally got my page set up nicely, they now consider me a professional trader (due to account type) and want to charge $75 a month (up from $25) for Aussie Options data. This will significantly effect my performance so I am on the lookout for other options (excuse the pun!).

 

[Sakti]

Have you ever considered looking at the US options? Despite the time zone challenge, a lot more liquidity.
Trading illiquid Aus options can be very tough when you want to take profit or manage your losses, which is very important for especially short term options trading.
Also, have you taken a look at the Nikkei N225 and Kospi K200 options? High liquidity and within the 'normal' time zone for us Aussies. But you have to pay attention to the multiplier for each option contracts and FX exchange.

 

[hamli]

Have you ever considered looking at the US options? Despite the time zone challenge, a lot more liquidity.
Trading illiquid Aus options can be very tough when you want to take profit or manage your losses, which is very important for especially short term options trading.
Also, have you taken a look at the Nikkei N225 and Kospi K200 options? High liquidity and within the 'normal' time zone for us Aussies. But you have to pay attention to the multiplier for each option contracts and FX exchange.

What are the codes for Nikkei N225 and Kospi K200? Are they indices or futures? Do you know if they have a volatility indicator like the SPX/VIX?

I'm definitely interested in increasing the products I use.

 

[hamli]

Its been quite enjoyable. Doing some shorter term options and well as setting some longer term ones as well.

The only thing I am not overly liking is my trading platform Interactive Brokers. I have finally got my page set up nicely, they now consider me a professional trader (due to account type) and want to charge $75 a month (up from $25) for Aussie Options data. This will significantly effect my performance so I am on the lookout for other options (excuse the pun!).

Yes, its a trade off between that monthly data fee and having margin+lower contract costs. I trade high volumes, so it works out for me - I couldn't replicate my strategy on platforms that charge over $10 min fee etc on my account size (6 figures) without taking a large hit to my P&L.

I don't trade ASX.

 

[Sakti]

What are the codes for Nikkei N225 and Kospi K200? Are they indices or futures? Do you know if they have a volatility indicator like the SPX/VIX?

I'm definitely interested in increasing the products I use.

The code is N225 for the Japanese Nikkei index. Volatility is tracked by Nikkei Volatility Index (JNIV).
KS200 is the Korean KOSPI index. Volatility is tracked by KSVKOSPI.
Definitely have a look at these as the liquidity trumps ASX200 and pretty tight spreads.

 

[bellenuit]

I want to dip my toe in the water for options trading by writing some covered calls on Apple (AAPL) stock. I already own the stock. This is through a US based broker.

I am a bit confused about US expiration dates though. I have read that they expire COB on the 3rd Friday of each month and when I look at the option chains for AAPL under Google Finance, they only offer one expiration date per month, the 3rd Friday. But Yahoo Finance gives several exercise dates per month. For example, for April 2017 it gives April 7th, 13th and 21st. MarketWatch's Options calendar also just shows 1 per month, like Google.

http://www.marketwatch.com/optionscenter/calendar/2017

My online broker also offers the 3 same expiration dates for April calls as the Yahoo website.

Is there any difference between writing calls based on the 3rd Friday of the month expiry and those using the other expiry dates and what is the reason for there being two expiry date calendars?

 

[peter2]

Some of the larger cap stocks like Apple have options that expire at the end of every week (weekly option chains) as well as those that expire on the 3rd week of each month (monthly option chains).