As I continue research on day trading, I'm learning that there are many different ways to do it. OEXOptions.com is a resource that I've been spending some time on...educating myself about the OEX, stock options, and the various options trading strategies..
For those of you who don't know, the OEX is the Standard & Poor's 100 - a stock index on the Chicago Board Options Exchange.
Options are contracts giving the purchaser the right to buy or sell a security, such as stocks, at a fixed price within a specific period of time. Stock options are traded on a number of exchanges, including:
* American Stock Exchange
* Boston Stock Exchange
* Chicago Board Options Exchange
* International Securities Exchange
* Pacific Exchange
* Philadelphia Stock Exchange
A major difference between trading stocks versus trading options is that stocks give you a small piece of ownership in the company, while options are just contracts that give you the right to buy or sell the stock at a specific price by a specific date.
Floyd, one of the lead traders at OEX Options, explains why index options are like fruit...
You can learn more about how to trade options by visiting the OEX Options website at: www.oexoptions.com.
Subscribe to:
Post Comments (Atom)
Share it
My best usage of options (nonsuicidal) was in long calls with at least a year of time on them. The shorter options can be insanely profitable, but the problem is that the time premium runs out, so even on the days when the stock is flat, the options get cheaper. You get more bang for buck with the more expensive contracts time-wise. They become like half-priced stocks, and that's where I think the sweet spot is. Derivative traders use computerized systems to trade on volatility and all kinds of crazy space-age stuff that makes it hard to keep up if you're a layman. Calls with at least a year of time premium on them that are near the strike price can make you a good amount of cash if you're already a good stock picker and they don't require as much capital. But still, you have to be REALLY confident because unlike stocks, you can lose all your money even if the corporation doesn't go belly up.
Knappador,
I do like the idea of options with a longer time period. I admit that all of this is a little foreign to me as most of my experience consists of trading individual stocks. Thanks for sharing your knowledge!