Archive for September, 2009
What the best way to learn options trading, possibly with simulated account or software to create practice deals before putting my cash on the line?
Although expensive, a very good book on options is "McMillan On options" by Lawrence McMillan. You can find it at a discount at www.half.com. McMillan has been in the options business for years.
the broker rejected my request to trade option, because of my income and liquid assets, so how much exactly i need to trade?
It depends on the broker. Scottrade will allow you to trade options with $3,000 dollars in your account. I don’t know what the income level is. I trade with them so I know this is true. Check them out. www.scottrade.com
I would like to learn on my own. Are there any free sites or good books that would include the ticker symbols so that I can virtual trade them for practice? Also, I am level four in trading options in my IRA account. Can options on futures be traded in an IRA account? Thanks!
Hi,
I am a retired futures trader. The best way is to move to Chicago and get a job in one the the trading pits and learn the basics from the ground up. Trying to learn this stuff from a book is almost impossible and yes there are a plethora of books out there, but the trading pit is the best way.
Go to Amazon, enter "futures trading" and select a book. Most of the stories you hear about some individual making millions are guys who got lucky, bet against the trend and made millions. Then, they will sell you a book on how they did it. Problem is it won’t work and you will be out. They made a lucky guess. Doesn’t tell about the thousands that lost their shirts and pants in this zero-sum game.
Kindest Personal Regards,
Walt Brown
Site Build It Certified Webmaster
capecod1@capecod-beaches.com
I went to this workshop on how to trade options. They charge $3000 for 2 days sessions. Do you know where I can get to learn it with less cost or no cost?
No.
$3000 is too high a cost to pay to learn what’s all free and available all over the net.
Go and download the "OPTIONS TOOLBOX" and play with it. Everything you need to know is there.
You can get this from http://www.cboe.com/LearnCenter/RCTools.aspx
Explore CBOE – Chicago Board Options Exchange, for wealth of free information on options. There you have links to other sites too – Options institute etc.
Buy the book – Options as a Strategic Investment by Lawrence G. McMillan, for lot less than $3000 ( think it’s $50 at Amazon.com )
p.s.
Mr.DowJones assessment that Option trading is riskier cannot be more wrong. On $ for $ basis, with respect to Risk & Reward, stock trading is lot riskier than option trading. Options goal is to minimize risk and maximize reward. No such thing with stock trading
Why would a trader want to waste his time on a trade worth a penny, that would be expiring a in a few days. There is no delta to this trade – what’s the point of it?
If someone buys an option worth a penny with only a few days to expiry then most likely he/she is closing out a short position. Better be safe than sorry.
Hi, im 13 and am taking my options in a few weeks. I want to be a commercial pilot but i don’t know what options to take. Can anyone help me?
Obtain as many secondary qualifications as you possibly can as secondary school is compulsory and so are the subjects your school does. While you are still at secondary school it is best and most advisable that you begin flying lessons in order to obtain your PPL license. This is the very first license you should obtain and after gaining your PPL you should continue to gain many other licenses and ratings:
Private Pilot License.
Instrument Rating;
Commercial License;
Multi-Engine license/add-on;
Certified Flight Instructor (CFI);
Certified Flight Instructor Instrument (CFII);
Advanced Ground Instructor (AGI);
Multi-Engine Flight Instructor (MEI).
There are quite a lot widely available. The first one you will do, PPL, you can start the lessons at a minimum age 14 years old, go solo at a minimum age 16 years old and obtain license at 17 years old. From there your instructor can advise you what to do next and from then on.
After secondary school, go on to tertiary education (Known as A-level in the UK, short for Additional Level). You can choose 4 or 5 courses to take for one year. For the second and final year you will drop one course. Preferably you want to be looking at taking Mathematics, Physics, A Language and a subject you enjoy. (If you’re doing 5 subjects which is very rare choose something else useful e.g. Geography, Engineering or most of all English).
For the second year as I stated you drop one subject. It is very advised that you drop the subject you enjoy as the other subjects are your main priorities. If you gain all of these then move onto university, choose any course you like, preferably the course that you are best at as airlines don’t mind which degree you have as long as you have one (However it is sometimes possible to become a pilot without a degree but is unlikely). Remember that during all these stages and levels of education continue with your flying and gaining more ratings and try to log as many hours as you possibly can. This is very important when it comes to decision time.
Airlines say that a degree isn’t required, which is partly true but the competition is extremely high and candidates with a degree are head and shoulders above the candidates who don’t have a degree. For university it is best that you choose to do a 4-year degree of the subject that you excel at the most. So, the subject you get best at A-Level, carry it on to degree level as airlines don’t mind which degree you have obtained but as long as you have one (although a degree isn’t a necessity). Or you could do a combinational degree as I did; I did Mathematics, Further Mathematics, Physics and Spanish at A-Level and carried Mathematics and Spanish on to degree level. The choice is yours on which subject to do.
Also, if you really want to become a pilot then you will be a better candidate if you have logged hours in a light aircraft. It is advisable that you log a bare minimum of 600 hours but really try to excel that target.
So, while you’re still at secondary school I suggest you begin taking flying lessons to obtain a PPL (Private Pilot License). Minimum ages are:
Begin lessons: 14
Go solo: 16
Obtain license: 17
Once you have obtained this you should log as many hours as you possibly can before entering university as you will be struggling financially unless you’re rich.
So by the age of 22 you could have all your GCSE’s, 4 A/S levels. 3 A levels, a degree and a PPL license.
With this you are an almost perfect candidate and stand an extremely strong chance of becoming a pilot. This is the way I did it so I like to think it would help other people as well.
For training for a PPL on a Cessna 150M here are the costs:
45 hours flying C150 – £5,175
Landing fees (estimate) – £300
Training items – £175
Annual membership varies for each school but mine is £99.50
Radio-telephony test fee – £55
Total – £5,804
GROUND STUDIES:
Ground school (when required) £25 per hour
Written exams – £30 each
IMC test – £65
Radiotelephony test – £65
PPL skill test – £130
Class 2 medical examination – £140
If you want to do it in a better plane such as a Tobago TB10 then add £21 for every hour you take.
Self hire for these aircraft are approximately £95 per hour including landing fee
Class 1 Medical examination
Study books (7 books at approx $30 each)
Instrument Rating
Radiotelephony equipment and test fee
Landing fees (varies on size of airport)
Ground studies and tuition
Written examination fee
PPL Skill test
IMC test
The only clothing you need is a highly visible vest (bright green or yellow)
Membership
Total cost approx £5500
I apologize that I don’t know which country your from so I can’t exchange the prices myself.
The prices vary with which aircraft you learn in.
To become CPL qualified and become an airline pilot you need a CPL. There are a couple of ways to do this. Pay for it privately which can cost from £55,000/$110,000. Which many people aren’t in the position to
Why would optionsxpress show historical data (assuming its accurate) that the current open interest on AVP July 12.50 Put’s is 814 but when you search the historical trades there weren’t even that many purchased? It shows 2846 from Friday either bought or sold. If you go back to November of 2008 nobody purchased that many. Is this just optionsxpress not updating there system fast enough or am I missing something? Yahoo Finance shows 2846 being traded but its not part of the total open interest. Another words is the open interest updated immediately or does it take time to show if it is a new position or a close out of an old position?
Open interest is updated once between every two consecutive trading sessions. It is never updated during a trading session.
One word of warning is in order. Yahoo Finance frequently has an incorrect value for the volume in option quotes. To get an accurate figure go to another source, such as
http://www.cboe.com/DelayedQuote/QuoteTable.aspx
I need over 10k to day trade options and stocks and need extra capital to make more money, will a bank loan me money for this purpose?
No. A bank will not, as you need something to legal tie the funds too…even with a signature loan, you need to explain the reason for the loan (this is to prevent money laundering). Your only option in this case is a Margin Account through your broker. But since you trade options, you would already have a margin account, which means you know you do need to maintain equity in the account.
There is an alternative. BUT, I wouldn’t recommend it.
You could engage in a Carry Trade. Again!! I do not recommend you do this for Day-Trading options or stocks!
You short a currency (the JPY is pretty popular). Just like shorting a stock, you get a credit. Since Forex is not regulated by the same Margin Rules as Equities, you can get 50K for a simply $500 account. With that credit, rather than buying Bonds with a higher interest rate than the rate of the shorted currency (Fed rate is 4.25, so you could get a bond around that rate, which JPY rate is .5%..you profit from the difference) you put that money into your options account. You need to be careful that you leave some room in your Forex account, as you do not want a Margin Call on this. And you need to make sure you monitor the currency market to make sure that the JPY’s flat…although if it is dropping, you have the added bonus of making money there too.
I am not suggesting you do this, but just saying that there are possibilities out there. Just don’t use this one, as it you need to be aware of what you are doing.
If held to expiration, and assuming the options are in-the-money, what happens to a credit spread (bear call spread or bull put spread) vs a debit spread (bull call spread or bear put spread)?
A credit spread is essentially a margin trade. You’re believing you’ll be able to buy back the spread for cheaper in the future because the direction of the stock will go in your favor.
I trade credit spreads all the time and I think they’re amazing. You don’t need the stock to move way up or down, just not go to where your spread is. This is amazing in my opinion.
Debit spreads are when you believe something is going favorably in your direction and you will make money by selling the spread for more money. It typically risks less capital than a credit spread, but you need more to happen to the stock.
A book I highly recommend on the subject is "How to Get Rich with options" by Lee Lowell. Fantastic book and will get you going in the right direction.
Happy trading!
Matt
Every time Obama does a major speach or press conference, go short? It seems that every time he does, the market tanks.
You are onto something and you gotta know that certain folks are making good money from the strategy you suggest. His words are the best indicator of what the market will do.