Has anyone successfully used any of the options advice paid services, such as those provided by Oxford Club or Jon Najarian? The services are expensive, ranging from $2000 to $5000 per year for a subscription. Have you found it to be worth it? It seems there can be good money made on the market, even during down times, by playing options. I'm just in the early stages of learning the basics. I'm hoping LitXchange starts operating sooner than later and will hopefully have algorithms to assist in options trades. Also, if anyone here is well versed in options, perhaps we can use this thread for tips on trading.

I'm not into options but I can help you by telling you what you're getting into.

Do a search using my User ID. IIRC, the primary thread title was "Any Day Traders Out There".

There have been some good threads on this forum, Check them out and if there's something we can help you with, come on back here and we can kick some ideas around.

Let's start with the most basic one; why would I help you? There have been people who have given me great and honest directions on where I should direct my efforts. it really made a difference so I do pass along the favor.

It's not easy to learn and it's not easy money, though.

V.

Options are basically gambling. It's a fantastic way to leverage a little bit of money into a LOT of money. I am not risk adverse and do a lot of trading. With the war in Iran, and the lack of decent on the ground intel, Trump is causing huge swings in both directions without any rhyme or reason. options are simply entirely unpredictable currently.

IF YOU INSIST on options, and you are extremely into a given market segment, maybe you know everything there is to know about widgets, what you can do is see when the widget makers have earnings and buy the correct put or call before earnings that expire post earnings.

but again they are as close to gambling as you can get in the stock market.

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but again they are as close to gambling as you can get in the stock market.

To successfully trade Options you have to be right in two ways: both direction and timing.

In 2008 I knew coal would fall out of favor. I bought put options on a coal company. I was right, but too early. They expired worthless.

The market makers make most of their money on options expiring worthless.

I learned the basics in MBA school. I’ve toyed with the idea but never put my money down. The “safest” bet is a covered put. You buy the right to sell shares of a stock at a predetermined price (normally below the current price) when you actually own the shares. If the price goes below the strike price, you make money on the option lessening the loss on the actual shares you own. If the contract passes without the price going lower than the strike price, you’re out the money you paid for the contract. Or you can sell a call option giving the right to the buyer to buy shares; in this case, the strike price is higher than the current price. Assuming you own the stock (again, a covered option), you effectively forego any increase above the strike price on the stock you own but if the price never goes above the strike price for the duration of the contract, you gain the amount you sold the option for.

More speculative is an outright purchase of a call or put option. You buy a call option if you think the price is going to go up or a put if you think the price is going down. If you bought a call and the price does go up above the strike price, then you earn the difference between the future higher price and the strike price. The return is higher than if you bought the shares but if the shares never goes above the strike price, you still have the shares you can sell whereas you’re out what you paid for the call option. The game is similar but opposite in direction with a put option.

The last configuration is a straddle where you buy a call at a price higher than current price and, at the same time, you buy a put at a strike price lower than the current price. In this scenario, you don’t care which way the price goes as long as it goes past the strike price on either end. But it needs to make you enough money to pay for the cost of both contracts plus your profit. If the price stays within the strike prices on both ends when when the contract ends, you’re out the cost of both contracts.

The further away the strike price is from the current price, the “cheaper” the contract is. The more stable the share price has been, the “cheaper” the contract is. I think the pricing model for options is called “scholes black” for the two economists who came up with the model. It’s supposed to tell you whether you’re getting a bargain for the current price of the contract.

Chellim’s comment is spot on. The biggest drag on your returns are options expiring worthless.

Yup. I have watched my buddies ride them straight into the ground.

It’s kind of like when your buddy says he’s going all cash because he is sure the market will tumble. I say the same thing every time. “That’s great, what are your indicators to get back in?”

Most people have no answer for that and hence it becomes a very costly idea.

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Originally posted by chellim1:
I was right, but too early. They expired worthless.

I did something similar with Ralston Purina about 25 years ago. There was even an article front page WSJ asking wtf was wrong with the market not responding to a done deal. My options expired worthless about 1 week before the market woke up.

Covered Calls is a good way to get feet wet into options. Buy the stock, sell the options. One learns how fickle the options market is, and how apparently manipulated it is. But with some time doing the research, one can make some decent percentages with covered calls. But it does take a lot of time to find the worthwhile spreads.

Naked options are worse than playing roulette.

Options will put patches on your britches. May as well bet balls and strikes.

I've traded options for 42 years. My last trade was last Monday on Goldman Sacs, it's expired and I keep the premium. I expect my next trade will be on Monday or Tuesday next week..

The only importance to that paragraph is to back up my claim that I am not a gambler, nor do I take obviously over-risky chances nor do I risk losing more money than I can afford because losses happen.

If you are thinking about trading, buy a book, my recc is "Options for Dummies". It starts simple and gets exotic as you go on. Read on until you find you are slipping out of your comfort zone. Look at Value Line's offering on options. The price is affordable and you can have a coach on your bookstand. You need to have a fundamental understanding right from the start because there are sharpsters and self styled experts ready to relieve you of your dough. (I'm a 'self-styled expert' the difference with me though is I'm not lined up to take your money)

I was licensed as an options broker for a long time, so I flatter myself that I have some idea of what I'm doing but keep in mind the only advice I'm giving here is to educate yourself. Buy a book. Decide if you want to screw with these things and if so for how much (Start small) and how long (start short).

For fun and insight find the book "Extraordinary Popular Delusions and the Madness of Crowds" especially the entries on "The Tulip Madness" and "The South Sea Bubble".

Good Luck, man; because that's part of the deal.

The posts about timing are so bang on. I spent some time day trading stocks and crypto, I don't day trade anymore. In the beginning you think it's about learning the market, but it's just as much about learning about yourself and your own greed. I had upside in hundreds of trades that I didn't close because I thought they would go higher.

It took me a while to find out what kind of trader I am. I am good at picking stocks that will go up, I have learned I do not know when that will happen. After 500 or so trades I finally learned to leave the trades alone for a while. Sometimes I'm a year early. I have also learned if I don't have a good idea I don't have to be in a trade, I can keep cash on the sidelines till a good idea comes to me.

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Originally posted by Rey HRH:
The last configuration is a straddle where you buy a call at a price higher than current price and, at the same time, you buy a put at a strike price lower than the current price. In this scenario, you don’t care which way the price goes as long as it goes past the strike price on either end. But it needs to make you enough money to pay for the cost of both contracts plus your profit. If the price stays within the strike prices on both ends when when the contract ends, you’re out the cost of both contracts.

Thank you all, so far, for the advice. The above is what the strategy offered by Oxford Club, which is a paid service. They're claiming an overall average return has been around 23% every few weeks, with a "win" record of 86%. The are using this strategy with RUT (Russell 2000). I was hoping somebody had experience with this strategy, and if the claimed returns and consistency seem possible.

This message has been edited. Last edited by: L90814,

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Originally posted by L90814:
I was hoping somebody had experience with this strategy, and if the claimed returns and consistency seem possible.

The problem with any "successful strategy" is that, as soon as it starts to show promise, everybody jumps on that particular train thereby letting all the steam out of the boiler. This is true for pretty much any aspect of business, or other activity that makes, or has the potential to make, money.

I buy LEAPS for the most part. I’m talking 12-18 months out.

A few PMCCs here and there when volatility is lower.

A good way to leverage losses to get bigger numbers, if you know what I mean.
Not a game for beginners and most knowledgeable people know better.

I live where one of the first gold rushes took place for those with adventuresome souls.
A question many have asked, who made the most money in the gold rush?
The answer, the guy selling the shovels.

Saying trading options is “gambling”, “playing roulette“, etc., are all very ignorant statements. Options are no more gambling than buying any stock- you are “betting” that the stock goes up, or down in the case of a short sale.

What options can be, is highly leveraged compared to stocks. What options also can be are great tools to hedge positions, or a more conservative way to buy a stock.

If you want to trade options, get educated and start small and slow. Decide what you want to do. There are many strategies other than just buying calls or puts.

quote:

Originally posted by L90814:

quote:

Originally posted by Rey HRH:
The last configuration is a straddle where you buy a call at a price higher than current price and, at the same time, you buy a put at a strike price lower than the current price. In this scenario, you don’t care which way the price goes as long as it goes past the strike price on either end. But it needs to make you enough money to pay for the cost of both contracts plus your profit. If the price stays within the strike prices on both ends when when the contract ends, you’re out the cost of both contracts.

Thank you all, so far, for the advice. The above is what the strategy offered by Oxford Club, which is a paid service. They're claiming an overall average return has been around 23% every few weeks, with a "win" record of 86%. The are using this strategy with RUT (Russell 2000). I was hoping somebody had experience with this strategy, and if the claimed returns and consistency seem possible.

No, the claimed returns and consistency do not seem possible. Furthermore, it is highly unlikely that any “system” that says “do this” is going to pay off in the long run. It’s just not that automatic, and if it is, the big computers got there before you even thought about it.

Furthermore , much like the tip sheets that are sold at the racetrack, you can bet that anyone with a winning system would just be using that system and not selling it to strangers.

quote:

Originally posted by honestlou:
Saying trading options is “gambling”, “playing roulette“, etc., are all very ignorant statements. Options are no more gambling than buying any stock- you are “betting” that the stock goes up, or down in the case of a short sale.

What options can be, is highly leveraged compared to stocks. What options also can be are great tools to hedge positions, or a more conservative way to buy a stock.

If you want to trade options, get educated and start small and slow. Decide what you want to do. There are many strategies other than just buying calls or puts.

non-sense.

if I buy a security and an option on a second security that's a week out and the option doesn't come into the money that option premium is gone, however I'd still own the security, regardless of it's current market value.

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Originally posted by FenderBender:

quote:

Originally posted by honestlou:
Saying trading options is “gambling”, “playing roulette“, etc., are all very ignorant statements. Options are no more gambling than buying any stock- you are “betting” that the stock goes up, or down in the case of a short sale.

What options can be, is highly leveraged compared to stocks. What options also can be are great tools to hedge positions, or a more conservative way to buy a stock.

If you want to trade options, get educated and start small and slow. Decide what you want to do. There are many strategies other than just buying calls or puts.

non-sense.

if I buy a security and an option on a second security that's a week out and the option doesn't come into the money that option premium is gone, however I'd still own the security, regardless of it's current market value.

I didn’t say that you couldn’t do that. I said that you didn’t have to do that. Regardless, if you buy the stock you’re still “betting” that it will go up. If you buy the call option, you have a shorter period in which it can go up, but your return can be much greater- hence, leveraged.

But what if you sell the call? Or sell the put? Not all options are just gambling.

quote:

Originally posted by chellim1:

quote:

but again they are as close to gambling as you can get in the stock market.

To successfully trade Options you have to be right in two ways: both direction and timing.

In 2008 I knew coal would fall out of favor. I bought put options on a coal company. I was right, but too early. They expired worthless.

Yup. I have traded options. Once I figured out that you could be 100% on the direction and close, but not close enough, on the timing and still lose the entire investment, I quit fooling with options and went back straight long positions on equities. I suppose one could sell covered calls and generate a little extra income, but I just quit fooling with options.

Its the same as asking if any debt relief companies actually work. 99% you lose your money with no benefit.