Plain Vanilla Options Trades.

[SOCRATES]

Perhaps he means one would never sell naked puts exclusively

Nah !...he is just contradicting for the sake of it........and talking to himself while he is at it.

I know very well who's who in the zoo, don't you worry.

 

[Splitlink]

Spitlink,

"Even if they don't fail, the shareholders, usually, get a better return on their money than the fund investors." Ain't that the truth. What's preferable? I'll stick with the shareholders here: a greater certainty of a small return vs a greater uncertainty of a larger return - less risk, less reward.

Grant.

I had a stake in PER's rise between 1994 to 1998---not all of it, unfortunately, but a slice. You can see how the argument is on the side of the shareholders, although, to tell the truth, I don't know what an investment in one of their funds would have given. But I bet not so much.

Split

 

[Profitaker]

Nuke Rpoof

If you can callibrate your betsize/scaling, so that a drop of -/-40% in the underlying overnight might only eat a few % of stake, then W.

If you sized your trades such that a 40% drop would only "eat a few % of stake" then the premium received against the margin required would be so small that you'd get a better return on capital at the risk free rate, i.e, gilts.

 

[superfly]

No, not exactly...because I am wearing a safety harness that guarantees I will not fall in..... ....so every shark and sharklet that appears and smiles at me gets frazzled...

wearing a safety harness = calibrated betsize?

 

[grantx]

Spitlink,

Illustration from International Herald Tribune last Monday: To end 2006, Goldman Sach’s $10bn Global Alpha hedge fund generated around $700 million in fees, made up of 1.5 - 2.0% management fees, 20% of any profit.

The fund suffered its first annual loss in 2006 at down 6%. “Before the fund can take its 20% in 2007 (it) must first make up the 2006 loss”. So, presumably, they’ll still take their 1.5 – 2.0% management fees, or c $15 – 20 million (I define billion as 1,000,000,000 or a thousand million). I’m sure they’ll scrape by somehow.

Grant.

 

[SOCRATES]

I have taken the unusual step of replying to a minion.

Since all proceeds go to charity, I would like to announce that I'll donate £ 10,000 to any charity of the winners choice, if anybody can find a winning trade posted by me on T2W. Or any losing trade posted by me. In fact, any trade whatsoever, posted by me, whenever, on T2W.
__________________
Good judgment comes from experience. Experience comes from bad judgment.

Yes, that is why you don't post any live trades...because you are waiting for one to arrive that for YOU is risk free, pathetic you are...clear off and post your graffitti somewhere else go on..clear off !

 

[Mr Soros]

By definition, you cannot prepare for the unexpected, because it is....unexpected. Yes you can prepare for the expected, but not the unexpected.

If one were prepared for the unexpected one would never sell naked Puts.

By definition you may be correct, but i think you know what i am referring to.

Okay lets change the word 'unexpected' to say...'possibilities' .

 

[SOCRATES]

wearing a safety harness = calibrated betsize?

No ...accurately anticipated future result....:cheesy: ...never fails....:cheesy: ...all of this is determined in advance....

 

[superfly]

If you sized your trades such that a 40% drop would only "eat a few % of stake" then the premium received against the margin required would be so small that you'd get a better return on capital at the risk free rate, i.e, gilts.

interesting: value of options change, sometimes return is less then gilt and maybe sometimes more then gilts?

 

[Mr Soros]

wearing a safety harness = calibrated betsize?

More like having a map and being aware of alternative routes if there is a traffic jam. But the map is essential in the first place.

 

[Profitaker]

So, a person needs to understand the risks involved, at a personal and at a market level.

The need to understand risk is always at a "personal level", whether that involves crossing the road, driving a car, scuba diving, trading options, or any other activity you care to mention.

If you don't understand the risks involved in any of the above activities you will surely get badly hurt, if not killed. Sooner or later.

 

[superfly]

No ...accurately anticipated future result....:cheesy: ...never fails....:cheesy: ...all of this is determined in advance....

So Socrates in that case , how do you do that......................?

Just kidding, weekend :cheesy:

 

[SOCRATES]

The need to understand risk is always at a "personal level", whether that involves crossing the road, driving a car, scuba diving, trading options, or any other activity you care to mention.

If you don't understand the risks involved in any of the above activities you will surely get badly hurt, if not killed. Sooner or later.

Textbook rubbish again.

 

[SOCRATES]

So Socrates in that case , how do you do that......................?

Just kidding, weekend :cheesy:

I can tell you..... ...but I have to shoot you afterwards....

 

[Profitaker]

interesting: value of options change, sometimes return is less then gilt and maybe sometimes more then gilts?

Exactly so. On the face of it, because the option writer creates and sells a contract out of thin air the returns are infinate, at least in theory. In practice however, he has to post margin, so the return on capital (%) is a direct function of premium / margin.

Psssssssssst do not mention margin to the Soc - he has no clue - ask yourself why ?

 

[SOCRATES]

Exactly so. On the face of it, because the option writer creates and sells a contract out of thin air the returns are infinate, at least in theory. In practice however, he has to post margin, so the return on capital (%) is a direct function of premium / margin.

Psssssssssst do not mention margin to the Soc - he has no clue - ask yourself why ?

Ha Ha Ha ...impoverished ingnoramus you are....the object of the excercise is not the size of the profits...it is the fact that they are consistent....Ha Ha Ha ....and decided in advance of the event....does your head in.....Ha Ha Ha.

 

[Profitaker]

Can the problem of margin be overcome by the writer?

No.

 

[SOCRATES]

Can the problem of margin be overcome by the writer?

.

 

[SOCRATES]

Ok, deal

I know this lot here are really desperate...but I did not include you with them...I am shocked..

 

[Profitaker]

What is the most popular option trade, the write or the buy?

It is exaclty equal, evidently, because for every option seller there must be.....a buyer.