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On CNBC, they always have some stock has huge call option or huge put option. Does that mean next day or next week, that stock either goes up or down? Can you take that news and use that to your advantage to buy stock?
Just curious how you trade with that news? sorry if this question sounds stupid, I am little scared to buy option.
On CNBC, they always have some stock has huge call option or huge put option. Does that mean next day or next week, that stock either goes up or down? Can you take that news and use that to your advantage to buy stock?
Just curious how you trade with that news? sorry if this question sounds stupid, I am little scared to buy option.
Thanks.
A high volume of shorts or puts can certainly drive the price of some stocks ... but you cannot always use that information with certainty. Why dont your paper trade some of those stocks and see if it works.
A funny example:
TESLA: people have been trying to short it since it was trading at $30 ... went up $40 ... $60 .. $100 .... $150 ... $170 ... and is still going up. What do you think happened to all the put options?
Every time TESLA goes down 10%, the bears get excited ... and then disappointed.
On CNBC, they always have some stock has huge call option or huge put option. Does that mean next day or next week, that stock either goes up or down? Can you take that news and use that to your advantage to buy stock?
Just curious how you trade with that news? sorry if this question sounds stupid, I am little scared to buy option.
What news?
The news was just a professional option trader seeing unusual and heavy activity in one option or another. Not news released by MohawK.
Yesterday Dr. J. referred to Mohawk. Someone bought over 1000 Feb. 135 calls and sold over 1000 Feb. 110 puts. Net cost was around 3.50 per contract. Mohawk stock did not react when the position was mentioned during the day, in fact it fell about a dollar. Today though MHK is up 3.24 and the Feb. 135 calls now have a profit of 1.40 per contract since yesterday.
1000 contracts would be 100,000 shares so the call side of that trade has a profit of 140,000.00.
The puts are down only 38 cents so the loss of those is 38,000.00.
Net profit in under 24 hours of $100,000.00.
Only large institutions or wealthy investors who can put up 35,000.00 on 1000 contracts can do such large trades. Dr. J. was just pointing out the large trades as possibly being smart money. They may or may not become profitable.
If you have never used options you should try one or two for a couple hundred dollars and see how they work.
Last edited by howard555; 10-24-2013 at 10:13 AM..
If you have never used options you should try one or two for a couple hundred dollars and see how they work.
I very rarely do options, but when I do, it's always the most basic stuff--spreads. I'd love to do more complex trades, but I have a hard time with the greeks. How did you master the greeks?
I very rarely do options, but when I do, it's always the most basic stuff--spreads. I'd love to do more complex trades, but I have a hard time with the greeks. How did you master the greeks?
Beta is the most simple one. It's a measure of volatility relative to the market.
The market is 1.0. A stock with a beta of 1.4 would tend to move more than the overall market over time.
It's a good tool for short term trading but not so useful for long term holders.
Beta has advantages and disadvantages. Beta: Know The Risk
Beta is the most simple one. It's a measure of volatility relative to the market.
The market is 1.0. A stock with a beta of 1.4 would tend to move more than the overall market over time.
It's a good tool for short term trading but not so useful for long term holders.
Beta has advantages and disadvantages. Beta: Know The Risk
I'm decent with beta. It's theta, gamma, vega, etc. that get me. I'll check out that link. Thanks.
I very rarely do options, but when I do, it's always the most basic stuff--spreads. I'd love to do more complex trades, but I have a hard time with the greeks. How did you master the greeks?
A great options book;
Options volatility & pricing by Sheldon Natenburg
Think or swim has a daily seminar called "swim lessons" that goes into great detail about options.
A great options book;
Options volatility & pricing by Sheldon Natenburg
Think or swim has a daily seminar called "swim lessons" that goes into great detail about options.
Thanks.
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