Recent content by Petrescu

It's perfect for the beginner. You can just save the chapters on spreads for when you are more experienced. I read the first few chapters and the chapter on volatility 3 times. It gives The reader a great conceptual grasp of the complex issues. The book has very many graphs not found in other books.

Writingcovered calls is not always silly. Here is my understanding. Someone please correct me if I'm wrong. Here's when it makes sense: You are long the stocks longterm but neutral short term and also short volitility short term. So you are long a tech stock that you think has a chance of...

I should have said "within" 1 years time not "in" 1 years time.

It's easy. Just look at the current price of the underlying (not the option). The options market perceives the current price is the most likely price of the underlying at any time in the future. next look at the implied volatility. If it is .4 or 4 it means there is a 2 in 3 chance (1 standard...

Id like to ask a question. But before I do please open up a 100 year chart of the Dow. What's the first thing that you notice? The upward bias is huge right. So how can the BS formula assume gain is only as likely as loss. BS assumes the current price is the most likely future price. Clearly...

Note you can't sell it "for" 25. You sell it got pennies or a couple bucks, it being the right of the counterparty to buy shares at 25 for a few months

I recommend reading the Sheldon book on options. I started out focusing on direction, and that book opened my eyes to volatility. If you're curious to see how volatility is similar to time just read the book.

Wait... How can you sell an option with a premium equal to the underlying. That is impossible. Either you're missing something or I misunderstood the question.

One more thing....if there was really a way to make a sure 4% monthly, I would retire tonight and put a downpayment on an island, or no a small country. That kind of profit is unthinkable without an enormous risk. 4% monthly is equivalent to a billion dollar lottery ticket. Do the math. It means...

In other words....that premium that you accept ever month and every year is really a ticking time bomb with a pink ribbon. If you hold it hong enough, eventually it will explode.

I buy OTM calls (home builder 2years) and sell near-OTM puts on high volatility stocks I want to own. All I can say is that for 2 months whoever sold me the OTM homebuilder calls made a good 5% monthly for 2 months but in the third month they lost 300%. So the takeaway is that by taking a 4%...