Options Trader Magazine

[wayneL]

Anyone here get "Options Trader Magazine"?

There are a couple of articles on condors and short starngles on futures (my main stock in trade)

Haven't read them yet but will report.

 

[Magdoran]

Anyone here get "Options Trader Magazine"?

There are a couple of articles on condors and short starngles on futures (my main stock in trade)

Haven't read them yet but will report.

Hello Wayne,


It’s not a bad magazine, there have been some good articles over the past year or so…

Not sure that I’d subscribe to it though…

Look forward to your appraisal.


Mag

 

[wayneL]

Hello Wayne,


It’s not a bad magazine, there have been some good articles over the past year or so…

Not sure that I’d subscribe to it though…

Look forward to your appraisal.


Mag

Agree about actually subscribing... I'm on a free trial... that seems to have gone on longer than the trial period

I usually spot at least one glaring mistake, or cliche'd myth in each issue.

After a quick skim over, I think I've found at least one again... and virtually no mention of defensive or morphing tactics. It's leave it on and take the loss or or exit.

Here is the URL

http://www.optionstradermag.com/chr87/OptionsTrader0906.pdf

 

[rhmt01]

Its not a free trial... its just free until they can be bothered starting to charge.

Same thing with currency trader. Its only active trader that has paid subscriptions.

Its only back issues and old articles that you have to pay for.

 

[Fab]

Talking about Option . I am currently looking at buying some mid - term option or warrants on ZFX (probably ending 01/07 or 02/07). Can anyone advise on any good ones and why ?

 

[Magdoran]

Talking about Option . I am currently looking at buying some mid - term option or warrants on ZFX (probably ending 01/07 or 02/07). Can anyone advise on any good ones and why ?

Hello Fab,


While we’d love to answer your question in full, please understand that following the Corporations ACT 2001 and the way ASIC is set up, that there are significant restrictions on giving financial advice, and to offer you particular advice on a specific security and specific related derivatives is problematic because of this.

What we can do is to talk in general terms… but the question that you ask is very complex, and there are a wide range of potential approaches here way too detailed to address in a single post.

If you went to a financial adviser with a specialisation in derivatives, they would ask you a series of questions (you wouldn’t have to answer all of these, but if you didn’t they may attach a disclaimer to the advice since they are required to understand your financial situation and goals). Partly they should also try to work at a level that you understand, and draw up a plan of action based on your risk profile, financial objectives, and help to determine a realistic strategy.

If you haven’t already, have a look at the full range of documents on the ASX site, especially on derivatives, warrants and options. Also, depending on your experience, you may consider accessing their free online courses which are very good for beginners.

http://www.asx.com.au/index.htm

If you’re more advanced than this, please visit the many threads on this site where Wayne, Margaret and I have commented in some detail regarding a range of related issues to your question.

Please be careful if you have limited experience using these instruments, as the leverage can work significantly against you if the underlying moves against your position.

A lot will depend on what your goals are, what your risk level is, and how realistic your methods are to achieve your objectives. Time frame is certainly a factor. Think about what Wayne has been consistently saying that each strategy is a trade off. For instance, the greater the leverage, the greater the reward and risk.

Warrants:
You should carefully consider the terms and conditions if you’re looking at warrants, and read all the documentation attached from the issuer (you may want to consult an expert in the field if your investment is significant).

If you want to be able to receive dividends try looking at the warrant types that yield dividends like instalment warrants and endowment warrants.

Options (ETOs):
You can use LEPO’s too (please see the thread and the ASX site for more details) – these are longer term options, and may be suitable for you to consider as well as ETOs.

Depending on your view, you may consider purchasing well out of the money positions, certainly if you are very bullish and perhaps hedge these with puts. You could be more conservative and buy at the money, or in the money positions.

What you need to do is to calculate what the effects might be depending on a range of variations about how the stock may trend. This is important to help to determine the risk and reward characteristics of alternative strategies, and strong or weak moves may significantly affect the value of your positions, especially if volatility moves for or against you (certainly with ETOs).

As Wayne has outlined, there are a range of volatility mitigating strategies available. It is up to you to do the due diligence to assess the risks involved. If this is too difficult for you currently, you may consider consulting a derivative expert that you trust. You may want to exercise some caution though, since it is dangerous to enter into financial arrangements that you don’t understand.

I would highly recommend having a set of goals and methods with a clear cut plan of action of how to deal with adverse or profitable moves – essentially having a trading/investment plan to lock in profits, or hedge potential losses, or even have stop losses. This is important since the leverage (depending on how aggressively you enter a position) may have to be managed very quickly.

I have used at the money instalment warrants and out of the money instalment warrants hedged with puts to great effect in the past during bullish trends to gain dividends, but I fully researched each instrument, and had exit plans based on both loss or profit, and calculated the maximum risk when considering alternatives. I haven’t used LEPOs, but these could also work effectively too.

I have also used way out of the money options with a longer time value than a sold position in a diagonal – but when I’ve done this, I have had the experience and knowledge to model these. Also, these approaches were geared to my risk tolerance and experience level. This may not be appropriate for you, and this is a vital consideration. There is some danger to investing with these instruments if you don’t understand them. My personal axiom is I just don’t trade what I don’t understand. You may consider adopting this approach too, but it’s your choice.

In sum, Fab, the question you raise is problematic both from a standpoint of giving financial advice to specifically address the stock and instruments you have identified, and at a generic level, there are too many variables to deal with to give a comprehensive response in a single post.

I have tried to outline some suggestions above to assist you in your endeavours, and you may find that a lot of your questions are addressed in the derivative threads of this site as well as the ASX site. As suggested, it may be worthwhile consulting a derivative expert of your choice to help you configure a strategy, hence being well versed in the theory will be an advantage.


Hope this addresses some of your question


Regards


Magdoran

 

[Fab]

Magdoran

Thanks very for your time in answering my query

Fab