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| 12/25 |
| 2008/11/10-26 [Finance/Investment] UID:51896 Activity:nil |
11/10 What is the difference between QQQQ and SPY? How should I decide
which one to buy?
\_ punch them into yahoo finance, click on Profile
\_ I trade QQQQ all the time, betting that it's going nowhere but
will have a lot of mini waves (up down 5-7% in a week), and I've
been riding on QQQQ and doing well based on this guess. I've been
monitoring SPY and see that both waves are so similar, that
it's most likely not worth trading both. DIA on the other
hand is like QQQQ, but more gentle mini-waves. I also do DIA.
I've been doing VERY conservative week trades. -week trader
\_ If that's your belief, look at butterfly spreads.
http://en.wikipedia.org/wiki/Options_strategy
\_ Can you post to the motd each time you trade? TIA.
\_ Check out QLD. It basically follows QQQQ, but the returns are
~2x QQQQ (up or down).
\_ Leverage, leverage, leverage! What could possibly go wrong? |
| 12/25 |
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| en.wikipedia.org/wiki/Options_strategy Options are financial instruments that give the buyer the right to buy (for a call option) or sell (for a put option) the underlying security at some specific point of time in the future (European Option) or until some specific point of time in the future (American Option) for a price (strike price), which is fixed in advance (when the option is bought). Calls increase in value as the underlying stock increases in value. Likewise puts increase in value as the underlying stock decreases in value. Buying both a call and a put means that if the underlying stock moves up the call increases in value and likewise if the underlying stock moves down the put increases in value. The combined position can increase in value if the stock moves significantly in either direction. It is one of many options strategies that investors can employ. Options strategies can favor movements in the underlying stock that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility. edit Bullish strategies Bullish options strategies are employed when the options trader expects the underlying stock price to move upwards. It is necessary to assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy. The most bullish of options trading strategies is the simple call buying strategy used by most novice options traders. Moderately bullish options traders usually set a target price for the bull run and utilize bull spreads to reduce cost. bull put spread are common examples of moderately bullish strategies. Mildly bullish trading strategies are options strategies that make money as long as the underlying stock price do not go down by the options expiration date. These strategies may provide a small downside protection as well. edit Bearish strategies Bearish options strategies are the mirror image of bullish strategies. They are employed when the options trader expects the underlying stock price to move downwards. It is necessary to assess how low the stock price can go and the time frame in which the decline will happen in order to select the optimum trading strategy. The most bearish of options trading strategies is the simple put buying strategy utilised by most novice options traders. Stock prices only occasionally make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilise bear spreads to reduce cost. While maximum profit is capped for these strategies, they usually cost less to employ. bear put spread are common examples of moderately bearish strategies. Mildly bearish trading strategies are options strategies that make money as long as the underlying stock price does not up go by the options expiration date. These strategies may provide a small upside protection as well. edit Neutral or non-directional strategies Neutral strategies in options trading are employed when the options trader does not know whether the underlying stock price will rise or fall. Also known as non-directional strategies, they are so named because the potential to profit does not depend on whether the underlying stock price will go upwards or downwards. Rather, the correct neutral strategy to employ depends on the expected volatility of the underlying stock price. Straddle - holding a position in both a call and put with the same strike price and expiration. The position is profitable (to the buyer) if the underlying stock changes value in a significant way, either higher or lower. edit Bullish on volatility Neutral trading strategies that are bullish on volatility profit when the underlying stock price experiences big moves upwards or downwards. |