Posts: 2903
Joined: 10/12/2007
From: NYC by way of Chicago
Status: offline
If you can make money exclusively on short-term options trades, you're a very special trader. For me, options trades are just part of a broader value-based investment strategy. If I can pick up insurance on an investment on the cheap, that makes the trade a lot more appealing. But they're ultimately wasting assets that expire without their time premium, and most importantly, they don't pay dividends. At some point, if my trades get big enough for the option premium to cover most of the brokerage fee, I'll start thinking about covered calls, but I don't like doing a 200 share trade for a 50 cent/share premium and then paying $13 to my broker. (I'm an RR, so my employer requires me to use a designated broke and I can't switch.)
One hint on options that the group might have taught you: don't accept the first offer; come up with a counter-offer. The options market generally has pretty wide bid-ask spreads and the market makers don't always put out their best bids. What you have to do instead is put out your own limit order until one of the algorithmic trading systems takes your bid and sells you the options.
< Message edited by blessedinnyc -- 6/9/2009 10:38:27 AM >
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