ATOT Options trading thread

[SSSnail]

DISCLAIMER: Any and all information posted in this thread are for entertainment purposes only and are not to be taken as investing advise. No one posting in this thread is responsible for your financial well being, the accuracy of the information given, or is liable for any losses of any kind.

The opinions of the posters in this thread do not reflect those of their employers, and are entirely voluntary. You should always perform due diligence before making investing decisions.

Warning: options trading is highly speculative which could result in total loss of your assets.

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With that out of the way, this is something I have always wanted to do here at ATOT. I know we have some adventurous traders here who walk on the wild side, and dabble in the speculative side of things. This should be the thread just for Options trading.

The purpose of this thread is to speculate on earnings, options play, strategies, and general Q&A's. Some posters here are expert in this field, so hopefully they can help with their knowledge. If you are a novice and want to learn more, don't hesitate to post questions.

All are welcome, let's have some fun.

 

[MomentsofSanity]

I'd be willing to help on some items but nothing speculative. I am a licensed broker.

 

[SSSnail]

I'd be willing to help on some items but nothing speculative. I am a licensed broker.

Thanks! It goes without saying that some of the posters on this board work in finance are are licensed. No one here is giving investment advise, or are divulging insider information. Just bantering on a message board for entertainment.

Anyways, my next target is JCP. They report earnings on 5/14, and the last time they did, the stock price took a nose dive. Everything on their books point to another disastrous earning report. Jun or July 15 or 16 puts don't look terribly expensive... :hmm:

 

[Miramonti]

There are a number of experienced people around here that have 'dabbled' in options...and most have the scars to show for it. 😉

Anyways, my next target is JCP. Everything on their books point to another disastrous earning report. Jun or July 15 or 16 puts don't look terribly expensive...

What are your goals? If you speculate on JCP, is it to use options to increase leverage/reduce investment cost by using options instead of buying/selling the stock, or to use options to reduce or complement risk while buying or selling the stock, or to discuss options strategies of either?

The phrase "don't look terribly expensive" is fairly limited...what volatility is it trading at...15's vs. 16's...Jun vs July...vs August? etc. Is that high? Low?

I think it's important to learn as much as someone can about options before they get involved, even when just dabbling imo. Someone can definitely keep it simple, and some have been fortunate to have made a lot of money that way, but the odds are more against you in the long run (more than they are already) if one limits their knowledge of how they trade and why they trade that way.

I can't help on the speculative side but for anyone wanting to learn about them, I can offer insight in the knowledge/understanding/strategy side (as a former options market maker and options specialist.) In the tons of options trades I've made, I've honestly never made a single speculative options trade. It was always about trading based on value and risk management (of trade and spreads, as well as for the overall portfolio.)

And another interesting note, something MeowKat (iirc) pointed out, that the best way to make money in options is to short them. Learning why is helpful to understanding options in general.

Anyhow, I'd be happy to try and answer any questions involving options. Like I said, I've never just speculated with them, so I'm sure others can perhaps have more 'free' thinking and feedback in that regard than where my experience biases or limits me.

 

[SSSnail]

My actual investment strategy was buying stocks with good dividends and sell cover-calls, and I've done quite well with that over the years. To me, it's the simplest thing to do.

Lately though, I've been speculating on different stocks based on several metrics that I have, which would yield significant gains if my speculation was correct. Call it gambling if you will, and it's my form of gambling. I'm not suggesting that anyone else pick up on it. Count this as casino money and has nothing to do with investing.

My last speculation was purchasing AMD May 18 2.50 calls before their earning release last week for pennies. This was due to several factors when I looked at the stock, and it was the right gamble.

I threw JCP out there as a topic starter, but after glancing at the stock's performance the for the last year and its pattern going into earning, their financials and outlook for this earning period, their drastically reduced profits margins, technical indicators, etc... it may make for a good bet. It's a primer, designed to provoke conversations. Have a look http://stockcharts.com/freecharts/gallery.html?JCP
http://www.google.com/finance?q=NYSE:JCP&fstype=ii&ei=A5KFUcjGNMqriALvngE

But don't limit this thread to just speculations, of course your informed opinions and great strategies are much welcomed, and not just for the knowledge, but makes for great conversations.