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43 minutes ago, dmedin said:

It's not a real 'option' - I think you pay upfront for those and don't get your money back - but it's one way to avoid getting stopped out and truly limit your losses.  I don't know why more people don't use call options?

Because they loose money on dying volatility and time.....Yes you limit your downside to the premium you have paid.  You do nt get stopped out they just rot.  

To make really good money on options you need to be prepared to buy/sell well out of the money and gear up from that.    Like buy cable calls at £1.40 strike when cable is at £1.20 , pay 10 pence for them and quintuple your money,  or something like that , or write options where the market is nt...but be prepared to cover those written options with cash futures ....writing options is NOT for the faint hearted..,,,,,

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S&P already made a new all time high today, got¬†a hurry on as it's a bank holiday weekend in the US and can't hang around all day ūüôā¬†may see some selling this afternoon as a 'just in case' play but if the market continues up into the weekend will tell you the bulls are max confident for the near term.

Dax and Dow not far behind, Ftse remains uncertain. 

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3 minutes ago, Caseynotes said:

S&P already made a new all time high today, got¬†a hurry on as it's a bank holiday weekend in the US and can't hang around all day ūüôā¬†may see some selling this afternoon as a 'just in case' play but if the market continues up into the weekend will tell you the bulls are max confident for the near term.

Dax and Dow not far behind, Ftse remains uncertain. 

image.thumb.png.3c26b1738fc8b20100b1193507acddbc.png

image.thumb.png.0a19a8fbcbe372b670b2add6d760c747.png

It looks like another up day but with caution. You are quite right about the afternoon which I am holding back some ammunition for that scenario to play out.

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4 hours ago, dmedin said:

Isn't it a fairly reasonable bet that the S&P 500 will be at or higher than 3400 in 6 months' time?

238533338_US500_20200214_02_57.thumb.png.4d8aa51adb0de3de46ed785f9c7d2bc1.png

If your Option is for S&P 3400 in 6 months, what happens if it hits that level before or after? Do you win or lose?

 

Haven't studied Options...and have no need so far but sounds intriguing.

Edited by HPbrand
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2 hours ago, HPbrand said:

If your Option is for S&P 3400 in 6 months, what happens if it hits that level before or after? Do you win or lose?

 

Haven't studied Options...and have no need so far but sounds intriguing.

You can sell it any time you like.  If you let it expire you lose the deposit (which was about £120 I think).

It's really just a spread bet/CFD made to look like an option but there's no stop loss.

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30 minutes ago, dmedin said:

You can sell it any time you like.  If you let it expire you lose the deposit (which was about £120 I think).

It's really just a spread bet/CFD made to look like an option but there's no stop loss.

What's stopping you opening an infinite number of Options if the only penalty is losing the deposit when it expires? One can set the expiry date far far into the future to be safe. Plus, I assume there is no overnight cost holding the position which immediately is more advantageous over CFD/Spreadbet. 

Edited by HPbrand
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24 minutes ago, HPbrand said:

What's stopping you opening an infinite number of Options if the only penalty is losing the deposit when it expires? One can set the expiry date far far into the future to be safe. Plus, I assume there is no overnight cost holding the position which immediately is more advantageous over CFD/Spreadbet. 

The only limiting factor is the drain of the deposit on your account.  No charges that I'm aware of (but no dividends either).  I especially like that it protects against brief temporary price spikes.

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59 minutes ago, dmedin said:

You can sell it any time you like.  If you let it expire you lose the deposit (which was about £120 I think).

It's really just a spread bet/CFD made to look like an option but there's no stop loss.

1459947441_US5003400CALL_20200214_10_05.thumb.png.3560f75cc3fe6b9bfa532c7c3870de2f.png

You pay 120 for the right to buy at 3400 at expiry, but you can sell it before

Take a look at thisūüėČ

https://www.barchart.com/options/strategy-indexes

https://www.barchart.com/stocks/quotes/$CLL/performance?mode=monthly

 

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traded the daily FTSE option today instead of the DFB and to be honest the spread on the option for a daily is too wide. Plus the option price movement lagged the index considerably. Advantage I liked was limited drain on your funds and you know how much you will lose

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42 minutes ago, dmedin said:

The deposit is returned when you close the position though ... ūü§Ē

Not an IG option....or any market option.   You loose it all if , you hold to the end and its out of the money.   You can close it before expiry any time...It ll be worth what the market is at the time you sell it.....

Say your option expires today at 12 noon.  Your call is SP 500 at 3400.....The spot market is 3383 say.....You loose the lot !!!   That is why your break even is :

The call price i,e, 3400 + the premium you have paid ...I think around 127 or so.  It expires on 18 th Sept 2020.   So on the day you need the market to be 3400+127= 3527...... Thats just to break even.....

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45 minutes ago, FT5E said:

traded the daily FTSE option today instead of the DFB and to be honest the spread on the option for a daily is too wide. Plus the option price movement lagged the index considerably. Advantage I liked was limited drain on your funds and you know how much you will lose

One thing i miss and would be a big improvement 

Limit orders on options (take profit)

Say if you buy at 30 and would like to sell half or all at 60

But i think i know whyūüėČ

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16 minutes ago, FT5E said:

Surely the best way to play options on IG is some kind of delta hedging strategy. I guess if you have a long future in profit, instead of using a stop loss, buy a put for the same strike price as your entry level and hedge it that way? Any views?

Yes that will work , except you ve given away some profit on your long position....There s no such thing as a free lunch.....

There are a multitude of option strategies ....collars/ costless collars strangles, straddles  hedges  all sorts..,,,  

Option traders use Black Scholes model for pricing options.,,,,

 

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7 minutes ago, cheviot said:

Yes that will work , except you ve given away some profit on your long position....There s no such thing as a free lunch.....

There are a multitude of option strategies ....collars/ costless collars strangles, straddles  hedges  all sorts..,,,  

Option traders use Black Scholes model for pricing options.,,,,

 

long Straddle on the FTSE would have worked a charm today virtually 100 point round trip from the open

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17 minutes ago, cheviot said:

Yes that will work , except you ve given away some profit on your long position....There s no such thing as a free lunch.....

There are a multitude of option strategies ....collars/ costless collars strangles, straddles  hedges  all sorts..,,,  

Option traders use Black Scholes model for pricing options.,,,,

 

That's way too complicated.¬† At least for me.ūüėę

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Was backtesting a delta hedge strategy just now, so long FTSE future on 2nd jan at 7510 {open price} on 20 th jan it hits 7620, the corresponding 7500 put was trading at premium of approx 80. Go long that put. At 31st jan that put hit a high of 350, now your future is down, but the put would have hit some nice bank. 

any views appreciated

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US stocks. 

On 12 October the Fed announced...not QE...an expansion of the Fed s balance sheet pumping $60 billion into the short end.  On that day stocks started to move higher and have nt looked back since,,,,,Last night the Fed announced that they will be reducing  'not QE'  funding op's .  Dow drops 100 points into the close....

The Fed is effectively funding the surge in US stocks....that is why there is a disconnect between INDexes levels and fundamentals.  

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4 minutes ago, FT5E said:

Was backtesting a delta hedge strategy just now, so long FTSE future on 2nd jan at 7510 {open price} on 20 th jan it hits 7620, the corresponding 7500 put was trading at premium of approx 80. Go long that put. At 31st jan that put hit a high of 350, now your future is down, but the put would have hit some nice bank. 

any views appreciated

If one balances out the other in profit Great....ūüėĄ

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