propanol Wrote: ------------------------------------------------------- > If you have decent math background (ie you know > calculus), read Neil Chriss’ Black Scholes and > Beyond. One of the best I’ve read, especially on > Greeks and option strategies. > > Neil used to work in my previous firm as a quant > portfolio manager and now manages his own hedge > fund I believe. He was previously the director of > Courant’s fin math program but has since moved on > to head similar program at UofChicago. > > it is not possible to get very good at options and > their strategies without some level of > sophistication in math. Is Neill managing his own hedge fund now? Last I saw him he was the something like director of quantitative research at SAC. I guess I’m a little out of touch. Anyway, to the OP - for your first foray into options I would strongly advise against long-dated options with sky-high vol. You should probably get your feet wet with something a lot less hairy and figure out the game. I’m sure you shouldn’t spend anytime trading options without understanding stuff at least at the level of Neill’s book (he wrote that to teach himself, btw).
JoeyDVivre Wrote: ------------------------------------------------------- > propanol Wrote: > -------------------------------------------------- > ----- > > If you have decent math background (ie you know > > calculus), read Neil Chriss’ Black Scholes and > > Beyond. One of the best I’ve read, especially > on > > Greeks and option strategies. > > > > Neil used to work in my previous firm as a > quant > > portfolio manager and now manages his own hedge > > fund I believe. He was previously the director > of > > Courant’s fin math program but has since moved > on > > to head similar program at UofChicago. > > > > it is not possible to get very good at options > and > > their strategies without some level of > > sophistication in math. > > > Is Neill managing his own hedge fund now? Last I > saw him he was the something like director of > quantitative research at SAC. I guess I’m a > little out of touch. > > Anyway, to the OP - for your first foray into > options I would strongly advise against long-dated > options with sky-high vol. You should probably > get your feet wet with something a lot less hairy > and figure out the game. I’m sure you shouldn’t > spend anytime trading options without > understanding stuff at least at the level of > Neill’s book (he wrote that to teach himself, > btw). No idea who this Neill fella is, but as i’ve written in the past Natenburg’s book is generally considered the bible of the option trading practioners book (ie - ignores the fancy math). responding to joey’s comment above - i don’t think the OP is looking to “trade” options but rather make a speculative bet on where this stock is gonna be in a few years out from now. let him have his fun (but i agree that it’s likely a losing proposition - reminds me of my buddy’s big bet on SIRI on the H. Stern play…).
To the original question, setting all the fancy option theory aside, notice that if you invested $520 in the $7.50 strike, you end up with a slightly higher profit ($1236) than from investing in the $2.50 strike.
no_slogan Wrote: > responding to joey’s comment above - i don’t think > the OP is looking to “trade” options but rather > make a speculative bet on where this stock is > gonna be in a few years out from now. let him > have his fun (but i agree that it’s likely a > losing proposition - reminds me of my buddy’s big > bet on SIRI on the H. Stern play…). That’s probably right, but I never think that way. I think options are always a vol play and if you’re making a directional bet you should do it with the security or similar.
I agree with Joey… options are hardly an ‘investment’ as they are, by nature, wasting assets. So if you’re not playing vol and direction, what are you playing?