It has been a long time since I have bought or sold an option. The whole game has done everything but put me in jail. But I've had some time to think about it. Working hard twelve hours a day, saving up a marginal amount of money every two weeks, I have realized that I can't work like this - out of my element - for too much longer.
The time has come to make some abnormal jumps in wealth, but now that I understand what the value of a dollar is I am going to be extremely dilligent.
I am going to focus on one stock at a time, each of which I am requiring myself to hold at least a $600 actual position in. On the third week of every month I am going to put a "boat" around my position, trading for one day, and making only two purchases - calls and puts that expire that Friday. The high variance that occurs around that time will make one option worthless and one profitable. The trick, as always, is going to be making the profit bigger than the loss.
So, the first stock is RIMM. I don't at all expect it to go up forever and quite frankly I'm worried about whether it even has the ability to stay in touch with smartphone market trends. As a Blackberry user and shareholder, of course I like the product. But one or two production and design decisions by Apple could completely destroy RIMM, who is apparently confident that business users will always find the standard Blackberry the most user friendly. Quite a gamble...
And this uncertainty, combined with the wide fluctuation of the stock, make it an ideal candidate to research from a money-making perspective. The chart I will create is going to show the fluctuation of RIMM puts and calls as a percentage change over the Thursday before they expire. Ime, Friday is way to unpredictable price-wise because the time element has an exponential effect on the price. A stock might climb 3 points and a near the money call won't change at all. I've seen it happen - it's happened to me - and because of all the technical elements that make things wacky on the final Friday, I better just stay away.
The time has come to make some abnormal jumps in wealth, but now that I understand what the value of a dollar is I am going to be extremely dilligent.
I am going to focus on one stock at a time, each of which I am requiring myself to hold at least a $600 actual position in. On the third week of every month I am going to put a "boat" around my position, trading for one day, and making only two purchases - calls and puts that expire that Friday. The high variance that occurs around that time will make one option worthless and one profitable. The trick, as always, is going to be making the profit bigger than the loss.
So, the first stock is RIMM. I don't at all expect it to go up forever and quite frankly I'm worried about whether it even has the ability to stay in touch with smartphone market trends. As a Blackberry user and shareholder, of course I like the product. But one or two production and design decisions by Apple could completely destroy RIMM, who is apparently confident that business users will always find the standard Blackberry the most user friendly. Quite a gamble...
And this uncertainty, combined with the wide fluctuation of the stock, make it an ideal candidate to research from a money-making perspective. The chart I will create is going to show the fluctuation of RIMM puts and calls as a percentage change over the Thursday before they expire. Ime, Friday is way to unpredictable price-wise because the time element has an exponential effect on the price. A stock might climb 3 points and a near the money call won't change at all. I've seen it happen - it's happened to me - and because of all the technical elements that make things wacky on the final Friday, I better just stay away.
