This article was originally published in The Option Strategist Newsletter Volume 8, No. 20 on October 28, 1999.
There are various trading strategies – some short-term, some long-term (even buy and hold). If one decides to use an option to implement a trading strategy, the time horizon of the strategy itself often dictates the general category of option which should be bought – in-the-money vs. out-of-the-money, near-term vs. LEAPS, etc. This statement is true whether one is referring to stock, index, or futures options.
This article was originally published in The Option Strategist Newsletter Volume 8, No. 5 on March 11, 1999.
From questions asked at seminars and personal appearances, it seems that most people have some difficulty in determining which option to buy once the decision to buy something has been made. This topic is perhaps more elementary than some of the rather high-powered volatility discussions of the past few issues, but it is a very important one. The option speculator must be able to make the “correct” decisions about which option to own, lest the research that was done in order to predict the forthcoming direction of the underlying instrument be wasted by the purchase of the “wrong” call (or put).
This article was originally published in The Option Strategist Newsletter Volume 12, No. 23 on December 11, 2003.
Probably too many traders treat options as pure speculation rather than the theoretically more profitable treatment as a hedging vehicle or as a way to take advantage of pricing discrepancies. Many of our articles deal with hedging or volatility trading (which is the generic term describing theoretical value trading), but in this article we’re going to change gears a little and talk about speculation – plain old vanilla option buying. Specifically, we’re going to talk about how option activity might denote a potential trade in a stock or its options, and then we’ll discuss how to follow up on the position – setting stops, and letting profits run if they develop.
This article was originally published in The Option Strategist NewsletterVolume 4, No. 1 on January 12, 1995.
Buying options is often regarded as one of the most speculative activities. However, as we have shown time and time again, there are often differing ways in which one can establish a strategy. These different ways may change the speculative to the conservative, or at least moderate things somewhat. Buying options is no exception.
This article was originally published in The Option Strategist Newsletter Volume 2, No. 24 on December 22, 1993.
We have often stated that one can reduce the risk of stock ownership by buying call options instead. This, of course, is contrary to what many consider to be "conventional wisdom", in which option purchases are viewed as extremely risky things. As with most investments — and a lot of other things in life — it's a matter of application; every strategy can't be painted with a broad brush. We'll go over the way to make call option buying a lower-risk alternative to buying common stock, and then we'll apply it to a currently popular strategy involving the purchase of the highest-yielding Dow-Jones stocks at year-end.
This article was originally published in The Option Strategist Newsletter Volume 4, No. 1 on January 12, 1995.
Buying options is often regarded as one of the most speculative activities. However, as we have shown time and time again, there are often differing ways in which one can establish a strategy. These different ways may change the speculative to the conservative, or at least moderate things somewhat. Buying options is no exception.
This article was originally published in The Option Strategist Newsletter Volume 2, No. 24 on December 22, 1993.
We have often stated that one can reduce the risk of stock ownership by buying call options instead. This, of course, is contrary to what many consider to be "conventional wisdom", in which option purchases are viewed as extremely risky things. As with most investments — and a lot of other things in life — it's a matter of application; every strategy can't be painted with a broad brush. We'll go over the way to make call option buying a lower-risk alternative to buying common stock, and then we'll apply it to a currently popular strategy involving the purchase of the highest-yielding Dow-Jones stocks at year-end.
