Haha it wasnt rude? I was out of ALZ a long time ago. My question related to whether your TA, which is usually quite good, was flawed on this occasion. It certainly surprised me.
nowwhat, No worries on these negative posts who see no value in your charts. The hub wants me to pay to reply privately to you, so I have to do it publicly. LOVE YOUR CHART ANALYSIS. So many good ones I could have made money on, here is one.
nowwhat wrote this to my sons regarding option buying and wanted to share it with you and others who want to trade using long premium. " Lucas start here. remember timing is everything with buying premium. Hey was that you doing that flip on ski video yesterday?????????????????????????????????????????????????????????????????????????????????????? DISCOVERY CONSISTS IN SEEING WHAT EVERYBODY HAS SEEN AND THINKING WHAT NOBODY HAS THOUGHT - LARRY WILLIAMS RISK BEING HAPPY Rob L Klatt December 30, 2011 · San Luis Obispo, CA · Reflecting on three mistakes in long premium(buying options). Risk being happy...You can make money when you know how to use volatility, time decay and price movement. The criteria research becomes a little more intense and expanded.biggest mistakes trading options. it's said that good judgement comes from experience - and experience comes from bad judgement.when it comes to options trading. bad judgement can add up to heavy losses. the sooner you fall behind, the more time you'll have to catch up not understanding that option purchases require direction and speed to be profitable while the quote above is funny, it certainly does not apply to buying options. if you buy options it is imperative to have two conditions occur,,,,a fast move and movement in the right direction....more on this later if your option trade falls behind, it is often too late to catch up. the time premium erodes, and the position ends up a loser. this is very different from stock trading where the investor only needs to get the direction correct. for example, say you buy a issue for $50 because you think its price will rise. if so, it doesn't really matter WHEN it moves higher. sure, sooner is better, but the point is that you will always have one point of profit for each point move in the stock regardless of when that move happens. any gain above 50 dollars is yours to keep. this is not true for options. what makes the options game so difficult is that you need to correctly determine the direction of the stock or commodity and how quickly it will get there. How to correct this mistake of not understanding that option purchases require direction and speed to be profitable. the main point you want to learn from this is that you can't just buy a call because your bullish(or a put because your bearish) that only works for stocks. with call options, you need to decide just how bullish you are. the next time you want to buy a option, figure out the break-even point(option cost+strike price for calls, and strike - option cost for puts) and see if that underlying value fits in line with your expectations of the stock. it should now be easy to see why this mistake persists with some options traders. if you consistently lose money on options by purchasing too high of a strike price, the last thing you'd want to do is buy a lower strike call for more money.... That's exactly what you SHOULD be doing, and why it's so easy to routinely make this mistake. and that's why it is number one on my list of mistakes in option trading. if your not comfortable putting more money into the option trade, try buying in-the-money but FEWER contracts. no matter how hard it may be, break the thought that a call is a call or put is a put. they all behave very different. remember the NEED FOR SPEED. here is option trading second biggest mistake. NOT BUYING ENOUGH TIME! there is never enough time,unless you're serving it. this habit stems from the fact that options traders typically don't want to put money at risk. therefore, they buy options with little time remaining in order to reduce the cost and thereby almost guarantee a loss! buying time is closely related to our first mistake. investors who do not understand that options must have the correct direction AND speed are easily tempted to buy short-term options. this is compounded by the fact that option traders are attracted to high leverage provided by options. the reason,"we pay extra for additional time when you can use that money to buy more contracts" again, you must remember that there are differences in the way each option behaves and that all calls are NOT created equally. they have different sets of risks and rewards, and it is up to the trader to decide which is best for any given situation. this is not to say that it's never okey to buy short-term options, as there certainly are times when they're the best. however, if you are more often than not losing on your options, buying more time can be an immediate help. buying time carries some strong benefits. first,obviously,you have more time for the underlying to move in the necessary direction. just in case your prediction is wrong - even if it's only a few days off....the added time on the option can bail you out of a losing situation. remember, you can always close out your option early and receive some time value back, which is a luxury not often provided with short-term options. a second benefit is that longer-term options become increasingly cheaper PER UNIT OF TIME than shorter-term options. for example, it is now may and PENN is trading around 48$ the may 45 call with five days to expiration is trading for $3.80 and the DEC 45 call with 187 days to expiration is trading for 9 dollars. while the DEC call is more expensive in terms of dollars, it is cheaper per unit of time. in other words, the may call cost 3.8/5days=76cents per day, the DEC cost 9 dollars/187days=4.8 cents per day. this will be true for any option.....the more time remaining, the cheaper the option becomes per unit of time. in the real world of trading, it will usually take between three and four times the amount of time in order to double the option price. the third benefit of buying time is that you increase the responsiveness(delta) of out-the-money options. if you must buy OTM options, longer maturity will make option's price appreciate more then a short-term OTM option. MSFT may 70 call is 0.90 DEC 70 call is 6.60. these two calls have deltas of 0.36 and 0.53 respectively. this simply means that if Microsoft were to move up a dollar over a short period of time, we would expect to see may calls to gain 36 cents and the DEC call gain 53 cents in price. now you are undoubtedly thinking that a 36 cent move on a 90 cent call is much bigger percentage gain than 53 cent jump on a call costing 6.60. once again, percentage changes are not money...... they are relative values.. .a 300% gain on a penny is not the same as a 3% gain on a million, get it? with all else constant, the longer-term options will make more money on that one point move. the reason the short term call has a higher percentage change is due to the fact that it is a riskier option. the very same reason that it will likely end up being a loser. the only way you will ever convince yourself to buy more time is to understand the differences between short-term and long-term options. short-term options behave like lottery tickets and either quickly become valuable or worthless. longer-term options will almost always have some value to them.... even if the underlying moves in the opposite direction. please don't think this means that you can't lose a significant amount of principal on longer-term options. however, the longer expirations typically do not become worthless in the matter of an instant, as is often the case with short-term options. the habit of buying short-term options is hard for many traders to break. that's because once the losses start to mount, they figure," why put out MORE money on a longer-term option?" in fact, it is this thinking that often makes traders use shorter expirations as well as OTM options in order to reduce the cost. these are almost surefire ways to ensure a loss... that brings us to another mistake in option trading,,,,buying only OUT THE MONEY OPTIONS.................................................HERE IS A TRADE WE PUT ON JANUARY 25th when we saw PG&E shoot up 50% day before. we bought almost a thousand dollars worth of premium$990 on ten CALL options. notice the strike price(DELTA) and THETA(time value) ">" />
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