Option Millionaires

[VERITAS77]

Investing in Options/strategy.

2 way/double/straddle position.

Remember to look for an individual option less than 3% of premium. (I lost multi thousands 2 yrs ago, playing high risk FAZ options, BECAUSE: I just started learning options and...didnt realize paying 30% premium was INSANEEEEEEEEEEEEEE. LOL)
I was going for the moon, but got mooned buying someones insanely price soon to be expired options...too risky of a move in that case. (this may help some folk out there). Also if playing "lottos" consider no more than $300 a trade.
They are lottos because 300...can bring up to 3k...300 is plenty for a pure speculative position. Side note.

(Below, is a smarter way to play lottos or non with your own dollar amount decided on).

EXAMPLE:

(XYZ) $10/SHARE... try not to pay more then .30 for these, for example. [ I personally look for a 1% or less entry premium]

So,

This will allow you to ENTER a PUT(downward) and CALL(upward) position IN THE SAME STOCK.

This provides coverage/position if the stock moves any direction, but flat obviously.
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*Example real time.
(CME) 300.86 Currently http://stockcharts.com/h-sc/ui?s=cme

Feb310c 3.25
Feb290p 2.90
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6.15 premium. OR 2% of 300.86(1 share)
This provides: 2 contracts, 1 put + 1 call for the next 2.5 weeks.
If...
(CME) moves +/- 10.00 : these should gain 2-3x premium, it seems.
**down side is if the stock trades flat for 3 weeks, sometimes happens.

But if either 3 dollar option doubles- it certainly is covering the reverse/opposite position. You would be a break even. No risk, but a flat movement would cause a premium loss quickly.

SO, Basically a LOW PREMIUM STRADDLE like this example...allows you to be in a security with less risk then- flipping a coin and going long/short on a stock.

You can pay a higher premium and you the same concept and BUY LONGER CONTRACTS. AKA: Mar,Apr,May etc.

Which would then LOWER the risk of a flat stock, but cost an upfront premium much higher. Prolly around 5-10% instead of say, 2% for this example only.

Commissions add up so, breaking even all the time is no good either.

However this strategy can work well for EXPLOSIVE stocks.
A 10% move in the underlying security may bring 5OO% gains as long as the initial buyin/premium was under 3% (from my observations).

So typically a 2.5 - 3x gain option is why we all trade options.
which would leave gains of around 50-100% ALLOWING the p/c staddle to cancel out. Not bad, when it works.

Papertrade this and any other security with a put/call straddle with a 3% premium and see the results FOR YOURSELF.

-VERITAS77 *^]-


Any other traders feel free to add to this with your own take as well.