Options

[Guest]

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Does anyone trade options and can give me some advice on an online source or cost worries, etc.? Starting to consider it.

 

[tsptalk]

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I don't know too many (or any) winning options traders. I'm sure there are a few, but the ones making the money are the market makers for those options. It really is a losing proposition. The best use of an option is as a hedge for your individual stock holdings.

I'm sure that's not what you wanted to hear but it is what I, and some friends of mine, have concluded after years of trying.

 

[Guest]

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Thanks Tom, I respect your advice. I'll just try it out on paper first. I think I'm getting addicted to this stuff! :shock:

 

[tsptalk]

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One thing about paper trading mlk_man, it doesn't take into consideration one of the most frustrating aspects of trading which is slippage. Slippage is when you try to buy or sell a position, in this case an option, and the price moves away from you just as you try to make the trade.

For example, you want to sell some IBM calls that you bought for $3.75. The price is $4.10 and you put in your market order to sell and you get filled at $3.90. If you had 10 contracts (10x100 shares) you get back $200 less than you thought. You can use limit orders but when you are trying to get out of a position quickly because the market is dropping or whatever, your limit order may not get filled.

Like I said it can be very frustrating, it happens all the time and you can't really account for that in paper trading. But don't let me discourage you though. Give a try with some smaller sized options and see how it goes.

Good luck,
Tom

 

[Rolo]

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Also, paper trading does not have the emotion and adrenaline that trading your real money has; it is entirely different. The only benefit I see in paper trading is that it helps you go through the motions in a simulated environment so you can get an approximate feel of it.

I never tried paper trading, I just dove in head-first in with a margin account. The idea of screwing up badly was my incentive to not screw up and really pay attention; I am a firm believer in negative reinforcement.

I never tried option trading. I do not know if I ever will. 1) I am still mastering trading long positions and will venture into selling short (with help from Frizz B. heh), and 2) Warren Buffett never did any of "that fancy stuff". 3) Options trading seems to lack conviction. Personally, I am very passionate (which is strange for a borderline psychopath, eh?), so whatever I do, right or wrong, I am doing it with firm convictions, so options trading is against my nature.

 

[Guest]

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I thiink I'll try my hand at regular ole' individual stocks then. I have about $1000 to play around with right now.

Rolo whatis your opinion on VSL:NYSE and MTE:NYSE? They are communications companies in India. I hear the economy in India has a chance to take off like China did years ago. Seems you're doing well in stocks so thought I'd ask.

mlk_man

 

[Rolo]

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Hmm. VSL is a large company that seems to have fizzled (tech bust and all) but is still around. It has negative revenue growth, a total buzzkill. It could be a Phoenix stock, I suppose; checkits news for a turnaround.

MTE appears to have gone public in 2003? It's growth seems to have stagnated, 2% 5-year growth rate. It has a 2.7% dividend yield, not enough to cover my margin interest.

These are largecompanies and not growth companies. I like growth companies. Will they grow? I do not know enough to say.

Neither of them have institutional support. Some would say this is a bad thing, but it could be a great thing, a diamond in the rough. I knew of RHAT andVLCCF before Wall St. heard of them and when institutions started scooping them up, up went the price like an 18-year old on Cialis. Don't gamble, though, have good reasons as to why you think institutions would be interested in the near future.



With the outsourcing and revenue we are sending to India, it sounds like it could be a good play. I hear ya on the East in general experiencing economic booms. (Finally, the rest of the world is coming around!) Do you have other news or resources about India? Honestly, I have been slacking in my reading and not keeping on top of all things money.

 

[Guest]

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Thanks for your opinion Rolo. Rumor has it, and again, just a rumor, that Warren Buffet may be investing $1 billion of his own money in India. :^

 

[Rolo]

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Bwahah...is he investing in it or buying it? hehe

Perhaps a fund that specifically invests in India may be a good idea?

 

[Guest]

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LOL. So is there such a fund?

 

[Rolo]

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"India Fund" (IFN).

http://quicktake.morningstar.com/cef/Portfolio.asp?Country=USA&Symbol=IFN&fdtab=portfolio

Eaton Vance Greater India: EMGIX, ETGIX.

They all took a huge hit in April/May.