Lucas,Stephen, Jordan - Most people would rather be certain they're miserable, then risk being happy...........................................................................................................................................................THESE TEN QLD CALL options were only three day trade for us. And this strike price is just recently back to at and in the money. We bought these and sold them shortly after November 2018............................................................ I just did this gamma trading recently buying calls OTM in the leveraged nasdaq ETF, point being bad habits are hard to break for me, but this CALL option strike is still above where this underlying ETF is trading as of last Friday. Those options expired worthless even though it shot up in value first 200% in a day, I closed and took profit of almost 100% that next day before these contracts expired worthless because the nasdaq started to continue to go lower below that strike WAY LOWER. LoL.................................................................................. SO writing that let's look at the contracts that have not expired yet because I bought lots of time premium, it is almost ATM and time premium has decayed a lot.------------------------------------------------------------------------------ In the nineties I traded lots ot OTM in the nearby contracts about to expire, we coined it 'GAMMA TRADING'. We look to buy options about to expire, one strike out strangles and count on IV spikes like we are seeing today. Mainly on the OEX,SPX, and spoos options. And when the Q's were created I started trading them because they cost a lot less. Lost a lot after my early winning streak thus making me a lucky loser thus needing to learn from my trading patterns. I have been lurking/reading here as of late 1998 and lately reading posts on this board, Thank you for all your commentary. The fact that many option traders lose money on options creates a pattern of behavior that only makes the losses more certain. After a few losses, most traders alter their picks in favor of short-term options and out-of-the-money options in order to reduce the cost of the option, both big mistakes. In doing so, they think the worst that can happen is they lose a couple bucks, so what's the harm? The harm is that they nearly guarantee a loss on a consistant basis. You can see the web of inaccuracies created by the first three mistakes and why they are so predominant in this business. Buying OTM options is another surefire way to stack the odds against you. As with buying short-term options, this does not mean that OTM options should never be used. It's just that they should probably not be used all the time, which is what many traders do. We can emphasize this point by placing a bell curve over the range of stock prices on the horizontal axis. Most stock prices will stay close to their current price over a short period of time. The futher away from this price, the less likely it will occur. With the bell curve in place, we can see that there is a small probability the stock will exceed $5($55 strike) away from the $50 mean, and an even smaller probability for higher strike. In order to increase our changes of a winning call option, we need to LOWER the strike price, not raise it(we need to raise the strike price for the puts). Don't try to minimize the pain by buying short-term or out-of-the-money options. Risk being happy.">" /> ">" /> ">" />
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