Sunday, September 27, 2009

[TheOptionClub.com] Options Action

 

Hey, I'm surprised that no one here has mentioned "Options Action" on CNBC. In Chicago, it's on at 7:30 PM for half an hour. It's hosted by Melissa Lee and features three or four regulars who happen to be options traders. I started watching it a couple of months ago, and the content was in my opinion beginner to intermediate strategies. Lately they have been discussing ratio spreads, risk reversals, and collars financed by put spreads. So they have gotten more intermediate to advanced with their positions. They always take the time to explain the risks and rewards with nice profit and loss graphs. My favorite segment of the show is called "Put up or Shut up." Here, two of the participants agree on the direction of a particular stock, but disagree on the derivatives used to profit on the expected move. This week, they agreed that oil stocks will be moving lower, and one strategy involving USO would be to buy a 1 X 2 put spread, specifically +1 nov_33p for $2.00 and -2 nov_30p for $1.80 for a cost of only $0.20. The other participant went with -1 nov_32p for $1.60 and sold one 37/42 call spread for $0.80 credit, thus collecting a total of $2.40 in premium. The risk profile in TOS for this trade looks like a condor with no downside protection. Next week they will assess their trades and suggest adjustments if necessary. By the way, TOS sponsors the show and the commercials they have are pretty entertaining as well. Anyone out there watch this?

RFH

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The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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