Comments on: Options Game Thrives on Plentiful Suckers

By: ben

ben — Mon, 26 Jul 2010 08:37:02 +0000

Im surprised at you Rick. I’ve been trading options for 15 years, and it’s not the length of time I traded them that proves I’m right. Neither does your 35 years of experience make you right. But the statement that the weekly options are almost guaranteed to expire worthless is wrong on its face. What is “almost guaranteed” is that half of them will expire worthless and half will expire with premium. I’m sick of people telling others the same story…of “whatever you do, don’t touch options.” I’ve made lots of money trading them, and plenty of others have too. Like any product, if you don’t know what you are doing you are likely to get burned , whether it’s options, stocks, or baseball cards. And if you do know what you’re doing, you can put the odds in your favor. I thought this to be a truism, and not something I would be assailed over for daring to criticize a comment by the great Rich Cash.

Options expiration week is when I do best trading options, and I am happy to now get an expiration week every week instead of once a month.

By: ben

ben — Sun, 25 Jul 2010 02:39:41 +0000

“now we can buy weekly options at a price almost guaranteed to absorb all price fluctuations and expire worthless.”

Ok…this is groundless stupidity. Yes there are winners and losers in options, but for every loser there is a winner. A glance at the expiring July options indicates that exactly half of options expired worthless and half expired in the money for nearly every security. If the call at a strike is worthless then the put is worth something and vice versa (save of course for those unusal instances in which the stock closes exactly at the strike).

And the comparison to the bucket shops is way off. With those options you would be sold out if the stock went against you by a few cents. They were almost invariably a sucker’s bet. With current options you can’t be margined out because you have to pay the full cash value.

I find the weekly options a great development. People can play the market on a short term basis without taking the risk of laying out the full price for a stock, and weekly options have much more volume and narrower spreads than longer term options. It is also everyone’s right to play the other side of these options and go short if they think they’re such a sucker’s bet. I’m sure Rick Cash is doing this if he has confidence in the veracity of his article.

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Groundless stupidity? You ought to learn something about the topic before you tee off on Rich. Speaking as someone who has been trading options myself for more than 35 years, twelve of them on the trading floor, I’d say he got everything right. It’s a rigged game, and retail players cannot beat it. RA

By: Rich

Rich — Sat, 24 Jul 2010 02:27:37 +0000

ISEE opening equity calls to puts higher today with 243% at 10:10 AM.
Tough to nervously fade trade raw skeptical emotions of fearful greed with Trailing Stops in and out, but profitable so far as weekly Big4 Asset Allocation Model Portfolio up 1040% year to date and TopTen Closely-Held Dividend Discount Value Portfolio up over 1100% the last four quarters, more than covering their costs and annual money back guarantee.
Courage and Patience often a challenge near turning points. Primary trend still down nominally since Oct 2007 and 2000 in terms of gold, despite fast-talking headliners broadcasting one-month high with SPX 1100 like March 2009 redux Stress Test.
Mutual equity funds sold off as ETFs sold up, especially commodity ETFs hampered by cotango rollovers building in losses. HFT three quarters of market and did not work so well Q2. QE2 a fantasy since QE1 did not work. Deflation may be about to rear an ugly Kracken head across all asset categories. Light volume ramped markets may lose by default and no Insider Buying to match pushed CEO Polls. The market climbed not a wall of worry, but hurdled a ditch of apathy. Gold pointed the way down. Time will always tell. Going on vacation and wish all of Rick’s Pick’s many thriving subscribers well…

By: Rich

Rich — Fri, 23 Jul 2010 23:19:41 +0000

This was written last week before AAPL gapped to 265.15 and flipped the Point & Figure Target up to 316.
In the past, P&F was unreliable around turning points.
If Rick made the argument for 316+ AAPL, would not be surprised, as Tech and Oil rode higher and higher in the late 70s while the rest of the market went south on vacation. Trailing Stops and blind luck patience work better…
http://stockcharts.com/charts/gallery.html?s=aapl

By: Rich

Rich — Fri, 23 Jul 2010 23:14:17 +0000

Wowee, how about 41 SPX points by 10:07 Monday now that the Corporate CEO Poll lured anyone left with cash into the bull trap…?

By: Rich

Rich — Fri, 23 Jul 2010 23:11:29 +0000

Benjamin you imply a good point that options in the past became popular right before big market breaks…

By: Rich

Rich — Fri, 23 Jul 2010 23:08:05 +0000

Absolutely right…

By: Rich

Rich — Fri, 23 Jul 2010 23:01:05 +0000

Jacob(Israel) was Isaac and Rebekah’s son…
http://www.womeninthebible.net/1.3.Rebecca.htm

By: Monty

Monty — Fri, 23 Jul 2010 20:19:52 +0000

gary leibowitz,

are you suggesting a downturn after the run-up in the next day or two?

By: gary leibowitz

gary leibowitz — Fri, 23 Jul 2010 17:26:31 +0000

As an aside: Saw your SPX price target today. An impulse wave to 1143 is right where I predict this will go. It could happen over the next 2 trading days. I am anticipating a nice run-up today and a follow thru Monday. That would also satisfy a Fibonacci turn-date. Your bear low is between 840 and 440? My take, if history does repeat we should see an initial low breaking 735 and possibly 666.