calling all stock gamblers

[pico]

who here play around with options?

[DrunkenLullaby]

Bought some puts on Discover (DFS) about a month ago. Got hammered on them last week after initially racking up big gains. With Nikkei & Hang Seng getting pounded right now, I look for my puts to move back into the black tomorrow. The Fed's bandaids are not lasting very long anymore.

[Justin7]

I do a fair bit with options. A lot of it reducing my volatility with positions I already own. I feel like a genius selling a lot of calls 3 weeks ago

[Destroyer]

If you decide to place an order for options, it may be prudent to straddle the options due to the volatility of the financial markets. Contrary to popular opinion, a majority of do-it-yourself option investors will lose money over the long term.

This is because (1) amateur option investors aren't knowledgeable in the complexity of options trading (their level of understanding typically does not exceed beyond puts and calls) and more importantly, (2) amateur option investors do not possess the information advantage compared to bulge bracket Wall Street firms.

This difference in the information advantage allows bulge bracket Wall Street firms to act before significant price movements occur in the underlying stock, which will substantially impact the value of the options.

In many cases, amateur option investors will eventually predict--incorrectly--the price movement of stocks, which will lead the options into out-of-the-money territory resulting in substantial losses. Therefore, it's worthwhile to consider placing a straddle on options largely due to the current volatile conditions in the financial markets. Good luck!

[RageWizard]

I kind of agree with the Destroyer about the option thing. Not so much on the Bulge whatever.

What's everbody doing today?

I'm gonna lay in the weeds unless the market starts the day down by 250 or so, then I'll buy back my 150 of the DIA and SPY plays.

If the market doesn't drop right away then I will probably watch volumes and short the rallys at the top to increase my long term shorts for the next month or so.

I don't have any bulge B.S. but I still believe the dow goes down to 10500 before March.

[DrunkenLullaby]

I don't have any bulge

It takes a confident man to admit this.

Top 'o the mornin' to ya Rage. Good luck today.

[RageWizard]

Hey drunkin song guy, have you seen the price of gold today? That's like 60 bucks in one week, and that asshole Bernake will probably drop rates sometime this week.

Hey do you know what a "Bulge bracket Wall street firm" refers to? I don't pay attention to any press releases or earnings (except the time they come out), or any hype from any company so I definitely don't pay attention to inside info. Isn't all info supposed to be by law released to everybody at the same time?

[DrunkenLullaby]

Yeah, lovin' my gold - that's for sure.

Isn't all info supposed to be by law released to everybody at the same time?

Yup, it is. Does it really happen that way? Nope. That's why they gotta throw Martha Stewart in jail, to "convince the average investor that the playing field is level" - while people still go on raping & plundering the markets each day with their info.

[RageWizard]

Yeah, that's why I pretty much disregard news, fundamentals or anything other than the chart. They can't fake the chart, and I can tell the most important thing about a company from a chart. Is money coming or going.

[RageWizard]

O.K. thats about enough for today. Just went short on another 150 for DIA $123.00 and SPY for $134.25. Put the stop at 3.5% and I plan on holding this for a couple of weeks.

[pico]

If you decide to place an order for options, it may be prudent to straddle the options due to the volatility of the financial markets. Contrary to popular opinion, a majority of do-it-yourself option investors will lose money over the long term.

This is because (1) amateur option investors aren't knowledgeable in the complexity of options trading (their level of understanding typically does not exceed beyond puts and calls) and more importantly, (2) amateur option investors do not possess the information advantage compared to bulge bracket Wall Street firms.

This difference in the information advantage allows bulge bracket Wall Street firms to act before significant price movements occur in the underlying stock, which will substantially impact the value of the options.

In many cases, amateur option investors will eventually predict--incorrectly--the price movement of stocks, which will lead the options into out-of-the-money territory resulting in substantial losses. Therefore, it's worthwhile to consider placing a straddle on options largely due to the current volatile conditions in the financial markets. Good luck!

thanks. i was thinking about creating couple of straddles, but the implied volatility is already pretty high. you're right about do-it yourself option investors. for the stocks that i am interested in, the risk premium is already couple of dollars. i am not going to long options with less than 170 days, so it is pretty hard to make money even in this volitile market.

when mlb season starts, the market should become less voliatle then, i think i'll create couple of butterfly spreads during the summer months.

i can see where the big firms have a huge advantage. they could go long on call/put before a large block purchase/sell.

[pico]

I do a fair bit with options. A lot of it reducing my volatility with positions I already own. I feel like a genius selling a lot of calls 3 weeks ago

you mean covered calls? yeah, i was doing that for a while then realized it is not really worth the hassle. if you think there is a price drop coming up, you're better off close out your equity position. also i think you might want to do a collar next time since you're hedged against a significant price drop.