Wednesday, July 1, 2009

Re: [TheOptionClub.com] how do you pick your options?



Hi Becki, while you have already gone ahead with F and Neva believes that F involves less risk (based on calculations in his post), please note that for the month of August, GG is trading at ATM IV of 49.66% whereas F is at much higher IV around 84.8%. Usually the market makes a good "guess-estimate" of what is coming up for an underlying and options are priced in taking all those things into consideration. Purely based on volatility, F is likely to make much bigger moves (in % terms) than GG until Aug expiration.
 
Bottom-line:
 
You may want to consider IV levels as an additional factor for making a choice between different underlyings.
 
Hope this helps.
 
Cheers Vikas
 
 
 
 

On Wed, Jul 1, 2009 at 1:10 AM, Becki Kain <anaisdog@yahoo.com> wrote:


I chose F because I don't have enough in my account to choose GG.  I need to wait for more shorts to close (this is all papermoney, of course)

thanks!

--- On Tue, 6/30/09, Nava Elgar <nava@gobulls.co.il> wrote:

From: Nava Elgar <nava@gobulls.co.il>
Subject: re: [TheOptionClub.com] how do you pick your options?
To: OptionClub@yahoogroups.com
Date: Tuesday, June 30, 2009, 10:08 AM

Naked put I want them to expire  so.... I am checking that both companies that you choose are bullish.
lets that they are.
then I will go to the less risk one .
risk =how much money i need if i am going to get assign/
if we are to talking numbers only so F is less risk. if you put 6 for 0.65
your max roi -0.65 risk 5.35 for 2 con max roi 1.3 risk 10.70.
 GG max roi 1.40 risk 31.60

so what do you choose?




Nava elgar  



From: "Becki Kain" <anaisdog@yahoo. com>
Sent: Tuesday, June 30, 2009 1:24 AM
To: OptionClub@yahoogro ups.com

Subject: [TheOptionClub. com] how do you pick your options?


I was looking at trading GG (naked short puts) for August. It's an expensive option, premium is 1.40 for a 33 put (as of this morning of course). now, you could trade F, 6 august put, make .65 instead and do 2 of them for the same premium as 1 GG. How do you pick in such a situation where you have something very expensive (risk more) vs something relatively cheap? (I hope this makes sense)

thanks in advance

Becki Kain



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