Bumps In The Road
A fair number of you have purchased my book
“The Options Workbook,” so I want to share with you my degree of flattery and humbly
thank you. When I was asked to write the book, it was in the “future” and
thus it seemed “far away.” As a schoolboy with his homework, I
procrastinated and ended up losing the lead-time I had. We “piled on” in the
end and got what we thought to be the salient points into the book, on time. We
wrote it for those who need to know about these topics and have no idea where to
get started…not for my friends that have been trading for a dozen or more
years. So it is not “high-brow” stuff, but it is pertinent, tight and to the
point and from the heart. We did it this way to foster dialogue with the
readers, too…many have come to the Website mentioned in the book.
We used real stock names and real prices of
options…something you don’t normally get from a professional practitioner,
because we’re not supposed to use real stock names (it’s in our rules). I
blew it there, and did not get the proper prior approval for that. We are in the
process of amending the oversight, and the new edition will have proper caveats.
It is important for you all to know that
options contain risks. Duh. But not everyone (I am told) understands that and
needs to be warned against using them improperly. For sure, some of the readers
in this forum have expressed questions in mail to us that are scary. We are
doing our best to guide these individuals onto a track that is safer and more
accurately matched to their desires of risk/reward.
Also, did you know that any examples in this
space do not include commissions and other costs. Transaction costs may be
significant, especially in option strategies calling for multiple purchases and
sales of options, such as spreads and straddles. Did you know that? Are you not
keenly aware of commissions? I’m supposed to tell you that.
And also, none of the ideas we proffer are
investment advice, per se, as we do not know your specific situation or
individual needs. Just ideas to mull around and test, so that you can see how
this things work. Then, when you feel good and ready, you see if they still make
sense for someone in your situation.
It is also important for you to know that
you can’t depend on liquidity being there all of the time. This isn’t so
obvious. We are trying our best to give you those clues in our morning numbers.
This is a situation that comes and goes almost hourly and is random. We try to
look at all of our spreads as if we have to hold them until expiration, anyway.
We believe in scaling and using proportion to move in and out of spreads. It is
important to have a plan and stick to it.
I’ve tried to walk a line and limit any
exuberance on my part. But the rules are such that I may not be able to write in
this space on a daily basis any longer.
We, as members, are supposed to have our
work approved before it goes out to the public and this does not lend itself to a
timely column. Our goal was (and is) to fill a need for the transfer of some of
our practical experience in a way in which you as the end-user can benefit
greatly. Based on the email, it seems as though we are (were) succeeding to a
great degree.
We wanted to tell you more about the new
SpreadSite that is coming up, the facility to let you access search engines and
inside prices. It will be up in June (so they tell me here in March) and
available through Schwab and then other firms. The CBOE is pioneering once again
and we’re excited about. But we may not be able to tell you much about this
facility that would potentially save you money and time (two assets we all could
use more of)… I hope to know in the next few days.
Are these all bumps in the road? Or are they
obstacles we cannot overcome and stay “fresh”…it is hard to say right
now. Either way, I’m backing off until we find out for sure. We’ll let you
know as soon as we find out.