Common vs Options - not.

  • Posted: 16 June 2011 08:12 PM #16

    Unique - 16 June 2011 09:36 PM

    ^Great summary Greg. I was lucky with my short position from 319.99->318.99

    Where you you see AAPL closing tomorrow?

    Notwithstanding the unusual, AAPL closed above $325 every day this week (AAPL’s worst in a long time).  I hold 157 Jun $320-$325 Call Spreads purchased last Friday, so all I want is a close above $325.  If I get it I make 20.45% in 8 days.

    Next week should be interesting.

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  • Posted: 16 June 2011 08:16 PM #17

    macglenn - 16 June 2011 10:44 PM
    kloot - 16 June 2011 09:42 PM
    macglenn - 16 June 2011 08:13 PM

    Stop putting your money in options

    1.  All the money in options is volume and liquidity lost from equities.

    2.  Less liquidity in the equity gives manipulators more power.

    3.  Selling AAPL to buy any AAPL call is selling pressure plain and simple.

    Help me continue the list of reasons.


    disagree - AAPL is one of the most liquid stocks in the market.
    call buying is buying pressure, not selling pressure.  call buyers have a vested interest in the underlying going higher.  call buyers are not making AAPL go lower.

    Your argument does not specifically address any of my three statements.  I maintain they are all true.

    Using your logic money, used to buy a new car, a home, vacation, put a child through college, or Exxon shares is adverse to the price of AAPL.  Of course they are, but only to the extent that the investor’s financial needs are greater elsewhere.

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    Posted: 16 June 2011 08:36 PM #18

    Gregg Thurman - 16 June 2011 11:16 PM
    macglenn - 16 June 2011 10:44 PM
    kloot - 16 June 2011 09:42 PM
    macglenn - 16 June 2011 08:13 PM

    Stop putting your money in options

    1.  All the money in options is volume and liquidity lost from equities.

    2.  Less liquidity in the equity gives manipulators more power.

    3.  Selling AAPL to buy any AAPL call is selling pressure plain and simple.

    Help me continue the list of reasons.


    disagree - AAPL is one of the most liquid stocks in the market.
    call buying is buying pressure, not selling pressure.  call buyers have a vested interest in the underlying going higher.  call buyers are not making AAPL go lower.

    Your argument does not specifically address any of my three statements.  I maintain they are all true.

    Using your logic money, used to buy a new car, a home, vacation, put a child through college, or Exxon shares is adverse to the price of AAPL.  Of course they are, but only to the extent that the investor’s financial needs are greater elsewhere.

    I agree, I should change the word “all” in statement no.1 to “much of”.

    On my third statement:  am I correct?  when a call contract is bought, 100 shares of the underlying are not bought by the seller until the contract expires and the buyer options to take possession?

    I have read on this board on more than a few occasions members claiming to have sold their entire AAPL position and converted their investment to leaps.

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    Posted: 16 June 2011 09:25 PM #19

    macglenn - 16 June 2011 11:36 PM

    I agree, I should change the word “all” in statement no.1 to “much of”.

    On my third statement:  am I correct?  when a call contract is bought, 100 shares of the underlying are not bought by the seller until the contract expires and the buyer options to take possession?

    I have read on this board on more than a few occasions members claiming to have sold their entire AAPL position and converted their investment to leaps.


    an option contract is a right to buy or sell at a certain price, by the expiration date, or an obligation to buy or sell at a price by the expiration date.  the shares don’t “exist” in terms of AAPL volume until (or if) the contract is exercised.  most options contracts are not exercised.

    also, call buyers did not necessarily sell 100 shares of AAPL and replace it with a call (stock replacement strategy).  they are likely just buying calls, or spreads initially. 

    AAPL’s share volume today was 17.87M.  eyeballing the options volume for the next 3 months strikes, plus leaps, the call volume looks to not even add to 200k.  and same for puts.  pales in comparison to volume of common shares.

    lastly, AAPL’s shares are about 70% owned by large institutions.  a few retail investors’ options activity is not going to exert ‘selling pressure’ on AAPL.

         
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    Posted: 17 June 2011 12:28 AM #20

    Unique - 16 June 2011 08:57 PM
    Luigitartaglino - 16 June 2011 08:16 PM

    Weeklies are huge thieves

    The Sec is useless

    Hedge Funds are thieves

    Who has more ?

    Not if you know how to play the weeklie game. I’ve made 17.5k today off weeklies.

    agreed.  you have to know what your doing to play with options period.  and you DEFINITELY need to know what your doing for the weeklies..

    anyone that wants to buy and sell options should play in a virtual account for at LEAST 6 months (preferably 12) and read a minimum of 5 good books…  plus various website material.

    I wish I would of followed the first rule…  I started with real money and no knowledge and lost a LOT of money.