“Ultimately, after many years I’ve sort of migrated to some core beliefs about how the individual retail investor can be successful with options: Delta-neutral volatility trading really isn’t effective for the small investor. Rely on directional edge. Use long-dated ITM options for directional plays. Be net long long-dated options and net short short-dated options. Risk management is key”

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Current subscribers are not left out. There is a separate random drawing for them.

First issue goes live March 22.

Option Sellers Beware.

Mark D Wolfinger on the folly of buying options.

Four trades this month, all in the US and all calls. One was called, Fedex delivered the cash on the Buffett / BNI inspired surge in transports. I’m glad to have the cash and FDX gone. FDX closed at $81.78, $0.28 above my sold total ($75+6.50).
AEO, MIDD and NUAN averaged a 4.6% cash gain for the six weeks and ended lower. If you’re both happy to hold and to sell a stock then calls are excellent dividend producing options. However, if you want to sell a company then sell it, …

Buying Telstra at current prices gives investors a relatively safe 10% yield while they wait for a respectable capital gain.

As a part owner of Amgen and nephew to a breast cancer sufferer I was happy to read Denosumab demonstrated superiority over Zometa. As an option seller it sent a shiver down my spine.

I know the synthetic theory of Puts and covered calls and I sell both naked puts and calls on stock I own. I have never entered a covered call as a Put is the better trade; less expensive and usually marginally more profitable. Believing writing covered calls is conservative made it as my fifth biggest mistakes in option trading. But I always wonder when I sell a call, “what the hell am I doing!” Why don’t I just sell the sell the stock and sell a put.

option expiration cycles for stocks may seem a bit confusing, but if you take a little time to understand them they become second nature. It can be very important to know what expiration months will become available in the future.

Don’t loose all your money is manifest, yet too many new options traders find themselves walking home from the track rather than sipping champagne in that limo they dreamed of.