I was also thinking about trading, options. Since it is end of
the day system will be difficult as Options markets would
have closed and will have to take the trade the
next day. Results could definitely vary. Agree with you
that capital is low.
Options on the SPY trade for 10 or 15 min after the 4PM
close....not as liquid then and you need to be careful for a good
entry but they trade.
And if you buy them in the next to front month (like June now,
or even anothe month out like July) on an average 12 day hold you
will be fine....2-3 months hold could be a big problem.
the problem with options is that you will also have a time
delay, the average trade length is about 12 days, however some
trades last 2 - 3 months, so these are things that you have to
account for. And yes you cannot sell options after hrs, which
would have been a problem yesterday
The thing about options is you need to take into account what
premiums you're paying, loss of option value due to time
degradation. The longer the underlying doesn't go in your
direction, or if it trades flat, the faster the option value is
going to go down as it gets closer to expiration. Your options
could expire out of the money depending on the month and strike
price that you took out. The SPY system could stay in the trade for
over a month. Make sure you take that into account when you decide
which options to take out (month, strike price, at-the-money,
in-the-money).
Another way to play options is to be an option writer. I'm going
to write options from time to time when playing the SPY system
depending on the situation. There are certain big advantages to
writing options over buying options, and some disadvantage too, but
I wouldn't recommend them without having a deep knowledge
first.
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Consider using options, you don't
SPY System
Posted by cclammers on 5th of May 2011 at 05:32 am
Consider using options, you don't need as much capital for the same or greater gains (or losses).
Regarding Options
Posted by kattap on 5th of May 2011 at 09:47 am
I was also thinking about trading, options. Since it is end of the day system will be difficult as Options markets would have closed and will have to take the trade the next day. Results could definitely vary. Agree with you that capital is low.
thanks
kattap
Options trade for 10-15 min
Posted by perthx on 5th of May 2011 at 10:55 am
Options on the SPY trade for 10 or 15 min after the 4PM close....not as liquid then and you need to be careful for a good entry but they trade.
And if you buy them in the next to front month (like June now, or even anothe month out like July) on an average 12 day hold you will be fine....2-3 months hold could be a big problem.
the problem with options is
Posted by matt on 5th of May 2011 at 10:19 am
the problem with options is that you will also have a time delay, the average trade length is about 12 days, however some trades last 2 - 3 months, so these are things that you have to account for. And yes you cannot sell options after hrs, which would have been a problem yesterday
The thing about options is
Posted by cw12 on 5th of May 2011 at 12:58 pm
The thing about options is you need to take into account what premiums you're paying, loss of option value due to time degradation. The longer the underlying doesn't go in your direction, or if it trades flat, the faster the option value is going to go down as it gets closer to expiration. Your options could expire out of the money depending on the month and strike price that you took out. The SPY system could stay in the trade for over a month. Make sure you take that into account when you decide which options to take out (month, strike price, at-the-money, in-the-money).
Another way to play options is to be an option writer. I'm going to write options from time to time when playing the SPY system depending on the situation. There are certain big advantages to writing options over buying options, and some disadvantage too, but I wouldn't recommend them without having a deep knowledge first.