Hi Everyone. This is to let you know that Tim Bourquin of TraderInterviews.com has interviewed me for a about 22 minutes. The Interview is now published in the web site.
http://www.traderinterviews.com/
Please be sure to visit and leave your comments.
Also check the Idea Lab in the web site and leave your opinions about my strategy, which I posted a few weeks ago.
Thanks
Juan
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6 comments:
Hi Juan,
Great blog here. I found your blog through the trader interview website. Interesting take on options. I understand you have read many of Peter Lynch's books. What books do you suggest for someone who wants to learn more about options (right now I focus solely on stocks)?
Anyhow, I added your link to my blog. I hope to read more.
-Kevin
Hi Kevin. Great to have you here.
I understand that you are looking for basic option's knowledge. In my interview, I mentioned Peter Lynch as a book that got me started in the Stock market, long before I traded options. Peter Lynch had a best selling book in the late 80's, early 90's when the Magellan Fund from Fidelity, which he directed, was the fastest growing mutual fund, hence P.L.'s fame.
If you are interested in Fundamental analysis, P.L.'s book is now a classic. Now a days, Jim Cramer has become more popular as a Fundamental's Guru. I am sure you have seen his books being recommended.
For options, that is a different matter altogether. I am currently working on basic options video clips, and I am posting them in a second blog of mine:
http://stockofthedayii.blogspot.com/
You can download the videos. I am trying to make it practically oriented, and more hopefully more fun. But with my own biases. I think it will be a good start for someone with stock experience.
There are many books on options, though, and you should really complement my videos with written material. Back in the 90's, I read "Getting Started in Options" by Michael C. Thomsett, which I found to be quite boring. I traded long calls back then, I was so successful at first, that I see no point in trading spreads. I know better now, that markets are more erratic.
More recently, I acquired the book "Options as a Strategic Investment" by Larry MacMillan. That book is really a compilation of all you can do with options, hardly what I would recommend for a beginner.
You see, I learned options quite a while back, so recommending a basic book is a questions I have not asked myself recently. My recommendation is that you go to "Amazon.com" and look at the table of contents of books and locate one that would explain the greats and the basic spreads. This one seems to cover the basics: Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Hardcover)
by Sheldon Natenberg
You can take seminars such as Optionetics, but in all truth you may end up disappointed because you DO pay a lot of money for only 2 days of information.
You live in the age of GOOGLE, so explore "options Trading".
check my basic options' web site and ask all the questions you want, perhaps we can exchange ideas on basic trading.
Eventually, I would hope, you'd come back to this blog because the PCCRC is the best way to trade options, in my mind.
You may want to check OptionPlanet too...
http://www.optionplanet.com/assembled/basics.html
Juan, as always thanks for the good advice. Other useful sites I check from time to time include
www.888options.com and www.ivolatility.com
I'm still looking for a "cheap or free" option scanner. OptionsXpress offers one but it's not good compared to most others.
Juan, what timeframes do you trade your PCCRC?
If anyone knows a good scanner, please post it here. I'm using the one from OptionsXpress but it's far from "good". I don't want to pay a grand a year just to find low volatility options.
Hi martin, thanks for your suggestions.
I used to visit ivolatility.com, but now they require registration with required personal details. I made it a point not to disclose personal information in the web. Many people trade with your e-mail and mailing address. So be sure you know who you give that information to.
Of course the best scanner for options is Optionetics Platinum, but it is not cheap.
The think or Swim platform has a scan tab. Be sure to check it out. I have posted an article about it.
The time frame for the PCCRC is quite obvious, once you become familiar with this form of trading. You'd be selling front month options which should be 4-10 weeks BEFORE expiration. So now you'd be shorting January options. You'd be rolling Jan Options to Feb options 4-10 DAYS before expiration.
Most of my trades are don when a company report earnings. So companies that report now (Dec) would be reporting again in March. So it is safe to enter options that expire AFTER the NEXT earnings report. So I pick long options >90 days to expiration.
Going further out only increases your costs, making it that more difficult get a good return on risk. Yes, return on risk, not on capital. I start my trade risking no more than 2% of my account. I want to make AT LEAST 100% return on risk. IF you go too far out in time, then your trade will cost more per share, so you'd have to reduce the number of contracts, thus reducing your leverage for both DELTA and VEGA. I hope this is clear. Those of you with Optionetics Platinum, can backtest some oaf this assumptions by back testing some of the trades we have discussed in this blog in the past.
Juan,
You do not really have to give any personal information to ivolatility.com. Just sign up for a free email account (hotmail, yahoo, etc..) using fake info and give them that email address. That is what I did and it worked fine.
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