Raw beginner

[avant]

I`ve traded shares in the past, also some traded options. This was a number of years ago. I would like to start again.

Prefer options or USF as faster. Paper trading USF`s at the moment, and would like to do it now for real. I would prefer to use on line broker dealing in options or USF`s, and would like to start slowly with limited capital, so that I don`t make a complete hash of it.

Any suggestions.
Avant

 

[anley]

Avant

I'd forget about USF as there is no volume or open interest in them. Don't believe LIFFE's hype about them.

If you want to trade options then fine but again make sure you only deal in stock options that have decent open interest, which most probably means a maximum of 20 (UK options).

Also use www.interactivebrokers.co.uk

 

[avant]

Thanks that has been most helpful. What about US options?

 

[neil]

Options

Thanks that has been most helpful. What about US options?

Some trade the QQQ options amongst others.

Go to Elitetrader:
http://www.elitetrader.com/vb/ and scroll down to "Options" forum. Plenty to read there. Ask about qqq options ( others too) and many people there will help you. Use the "Search" facility on Elite trader and enter "QQQ options" or whatever takes your fancy.

Also

Try here:http://boards.fool.co.uk/Messages.asp?bid=50114

Look for a chap using the name "Kenmegsmith", he has actually traded QQQ and other US options. Ask him for sources - he will help you.

Just remember Options are not easy
Hope this helps

 

[anley]

Sure, US options are good but then again you're most probably going to have to pay offers and sell bids which is not that bad news unless you're trading options that are say under $0.50 or even $1.00 because then the bid offer minimum of $0.05 is very expensive.

I say pay offers and sell bids because basically you can work a bid and an offer but most of the time you'll find that your bid gets filled when the market goes offered. For example say the current price is 1.00-1.05 and you want to buy 1 lot at 1.00, you can work this bid no problem at all. But it's very likely that in order to be filled the market will go .95-1.00. And no it's not you but most people who trade these things including myself. Always wise to take these things into condiseration.

But using a broker like interactive where the comms are very good nulifies alot of this problem. Also with their software you can be quick to enter and exit orders.

If you've been out of the game for a few years then my advice is simple (I think you know this anyway but it's good to repeat). Open an account with a few thousand and trade 1 or 2 lots for AT least a few months to see what's what and get a feel. Don't get any illusions of making any big money (percentage of your stake) and if you lose money then put this down to some good experince.

And with option volatility very low at the moment I would tend to be a buyer of options rather than a writer. I myself am looking to buy some long dated puts (Jun - Sep) on stuff like QQQ and SMH but edge into them slowly because as much as I think the market grossly overvalued if someone showed you the chart of these two markets without telling you what they were, you'd have to say that they still look very strong with no sign of any impending weakness.

Hope this helps and sorry about my spelling (it's late, I can't spell and can't be bothered to copy/paste to Word to check!)

 

[anley]

OH, yeah and go with what Viagra Neil says.........

Options are not easy!

In fact I would generally say that options are a very very efficient tool at transfering wealth from people who REALLY understand them to people who either a) think they do, or b) don't.

 

[BBB]

I used to trade Options at LIFFE when the floor was open. Try Sheldon Natenburg's book: Option Pricing and Volatility. All you need to know + more! You can probably get it from Amazon