Has anyone done online trading?
- Thread starter Spacealien2
- Start date
I do online trading all the time, but only equities or fixed income and through my Waterhouse account. You should read up a lot about how options work before signing up for this or any web-site for that matter. If you don't fully understand how options or any investment vehicle works you run the risk of losing big: You may want to start here: http://www.investopedia.com/university/options
I believe all online brokerages including TD Waterhouse, Scotia iTrade, E*Trade, etc. allow you to trade options.
I believe all online brokerages including TD Waterhouse, Scotia iTrade, E*Trade, etc. allow you to trade options.
Oh cool, thanks.
Do you hedge? I learned about it in math class (black scholes) but no practical experience.
Do you hedge? I learned about it in math class (black scholes) but no practical experience.
Have a look at the web-site I referenced above and read, read, read before you put your hard earned money at risk.
The only option strategy that is not speculating is a covered call strategy.
If you have money you can afford to lose and like to gamble go for it. Don't mistake options trading for investing.
If you have money you can afford to lose and like to gamble go for it. Don't mistake options trading for investing.
Pretty much yup.The only option strategy that is not speculating is a covered call strategy.
If you have money you can afford to lose and like to gamble go for it. Don't mistake options trading for investing.
Option trades that are not covered are naked positions and thus speculative.
The only caveat there is that even naked positions in options can offer a higher risk/reward scenario requiring less capital than naked underlying equity positions. That's the one advantage of options I like. But you have to know what you're doing or even with less capital you're just throwing money away.
Online trading
I took the course is expensive but worth the week of training
Www.onlinetradingacademy.com
This school is in. Toronto
There is a school who is independentI think some of the brokerages have "practice" accounts where you don't play with real money. Sort of like playing war games with dummy bullets. Might be a good way to learn before you risk your own money.
I took the course is expensive but worth the week of training
Www.onlinetradingacademy.com
This school is in. Toronto
My strategy is to buy boring sure long term stocks and sell covered calls on the stock. Always buy dividend paying stocks. While you wait for the upside, you get the dividends and the price paid on the covered call. In the short term I am getting better than any bank or GIC can pay me, in the long term even with safe sure stocks the potential is 10-15% annually.The only option strategy that is not speculating is a covered call strategy.
Covered call writing works best with very safe stocks. You sell the right to another person or entity to buy your stock in a specified time period. If they do not buy it in that time, you retain the stock and the price paid to buy the option. However, if the price of the stock takes off they buy and you loose the upside.
If you have money you can afford to lose and like to gamble go for it. Don't mistake options trading for investing.
That is amazing.My strategy is to buy boring sure long term stocks and sell covered calls on the stock. Always buy dividend paying stocks. While you wait for the upside, you get the dividends and the price paid on the covered call. In the short term I am getting better than any bank or GIC can pay me, in the long term even with safe sure stocks the potential is 10-15% annually.
The problem is when you get called and miss out on the rest of the upside. Do you buy back in?My strategy is to buy boring sure long term stocks and sell covered calls on the stock.
I'm guessing he should.The problem is when you get called and miss out on the rest of the upside. Do you buy back in?
RBC has one: https://www.rbcdirectinvesting.com/practice-accounts.html though they'll likely bug you to open a RBC checking, and real brokerage account at some point.I think some of the brokerages have "practice" accounts where you don't play with real money. Sort of like playing war games with dummy bullets. Might be a good way to learn before you risk your own money.
If it is a safe boring stock and you sold a call on the stock and the option was exercised you do buy back in but at a later time. The upside went to someone else. You will have to wait for the next opportunity on this stock. Your best bet is to move on to another stock with potential, maybe come back to this one at a later time.The problem is when you get called and miss out on the rest of the upside. Do you buy back in?
There are not really any "safe sure stocks" http://gallery.mailchimp.com/6750fa...s/The_Capitalism_Distribution_12.12.12_1_.pdfMy strategy is to buy boring sure long term stocks and sell covered calls on the stock. Always buy dividend paying stocks. While you wait for the upside, you get the dividends and the price paid on the covered call. In the short term I am getting better than any bank or GIC can pay me, in the long term even with safe sure stocks the potential is 10-15% annually.
Sorry 10-15% is not realistic for a covered call strategy. You may think that is what you are getting but there is a very, very low probability that you are actually getting that return.
http://tradingmarkets.com/recent/ca...rofits_-_not_as_easy_as_it_sounds-754753.html
Covered call yield is not as simple to calculate as it first appears, says Michael Thomsett of ThomsettOptions.com, so he outlines these basic rules to streamline the process.
What is your return from writing covered calls? The answer: Well, that depends.
In order to accurately calculate your return, you need to set a few rules for yourself. These include:
1. Use the same calculation for all of your covered calls.
2. Compare return for different strikes.
3. Annualize returns to reflect them on the same standard with each other.
4. Take dividend yield into account.
Same calculation for all. The “same calculation” refers to the method of calculating the return. For example, if you hold the call to expiration, what is your yield? Do you base it on your cost of the stock, current value, or the strike? Whichever method you employ, it has to be consistent, and a rationale can be used for any of these. However, the only unvarying standard is the strike, so this is a recommended base for the calculation. If the call were exercised, that would be your sell price, so it should also be your calculation price.
For example, a stock price closes on April 6, 2012, at $81.83. The April 82.50 call was at 1.14. To calculate based on the strike, the “if expired” return would be 1.4%:
1.14 ÷ 82.50 = 1.4%
Compare return for different strikes. In the case of the example above, you can earn more cash by picking a later strike. Comparing April to May and June as of April 6:
April 1.14 (1.4%)
May 2.50 (3.0%)
June 3.75 (4.5%)
Annualize returns. Looking at the short list above, it seems as though the later strike is a smarter deal, right? Wrong. When you take into consideration the holding period, you discover that the shorter-term calls yield better than the longer-term calls. This is due to the accelerating time decay when closer to expiration. If these positions had been opened on April 6, holding periods would be 0.5 months (April), 1.5 months (May), and 2.5 months (June). To annualize, divide the return for each by the holding period, and then multiply by 12 (months):
April (1.14% ÷ 0.5) x 12 = 27.36%
May (2.50% ÷ 1.5) x 12 = 20.00%
June (3.75% ÷ 2.5) x 12 = 18.00%
In this example, you would be better off writing a series of covered calls expiring in one month or less, and repeating 12 times per year, than you would writing a three-month call four times per year. Annualizing puts all of the positions on the same basis; and while it does not necessarily represent the return you should expect to make consistently, it is a great method for checking accuracy.
Take dividend yield into account. If you compare dividend yield for three underlyings that all yield approximately the same on covered calls (and are otherwise equal in the fundamentals), dividend yield can be the great deciding factor. One company yielded 2.25% as of April 6, not a bad rate for a dividend. In fact, it is much better than a competitor, which yielded 1.74% or another at 1.40%. So if these underlyings were all otherwise equal, picking the highest yield would make the most sense from a dividend perspective.
Covered call yield is not as simple to calculate as it first appears. So follow these basic rules and make sure your comparisons are fair. Use the same base for all possibilities, compare yields on different strikes, annualize, and compare dividends.
I am not saying that covered calls alone will bring you returns of 10-15%. If you were to buy a very safe stock and wait for the upside you will receive dividends on the stock in the range of 3-6% annually. You also have the potential to make a few more % with covered calls.
In the medium/long term a return of 10-15% is not impossible or improbable. It is easily dooable with minimum risk.
Good quality stock with potential upside
+
dividends
+
covered calls
=
10-15% average annual returns
+
dividends
+
covered calls
=
10-15% average annual returns
In the medium/long term a return of 10-15% is not impossible or improbable. It is easily dooable with minimum risk.
BMO has several ETF's that utilize covered calls on the stocks within the fund. I believe the strategy is to write calls on about half the holdings to increase return in a sideways moving market. If a particular position is called away then they buy it back to keep the portfolio weightings intact.
My goal here is to educate not argue. If you like, I can look at your statements for the past few years and calculate your actual return. You probably won't like the real numbers. Normally it would cost several hundreds of dollars per hour for that service.I am not saying that covered calls alone will bring you returns of 10-15%. If you were to buy a very safe stock and wait for the upside you will receive dividends on the stock in the range of 3-6% annually. You also have the potential to make a few more % with covered calls.
Good quality stock with potential upside
+
dividends
+
covered calls
=
10-15% average annual returns
In the medium/long term a return of 10-15% is not impossible or improbable. It is easily dooable with minimum risk.
Risk and return are related. You should not expect higher returns from a lower risk strategy.
Selling covered call options reduces portfolio volatility and risk. You give up most of the potential upside in exchange for option income.
Selling covered calls for consistent profits is a challenge even for professional managers of mutual funds, so what chance does an individual trader have? Probably not much, at least over the long term. The potential for lost profits, additional taxes, and constant fees makes the covered call strategy questionable for most investors.
http://seekingalpha.com/instablog/2...41-the-many-pitfalls-of-selling-covered-calls
http://www.fool.com/investing/dividends-income/2007/07/12/stay-away-from-covered-calls.aspx
Why am I not surprised you are this uniformed.
My strategy is to buy boring sure long term stocks and sell covered calls on the stock. Always buy dividend paying stocks. While you wait for the upside, you get the dividends and the price paid on the covered call. In the short term I am getting better than any bank or GIC can pay me, in the long term even with safe sure stocks the potential is 10-15% annually.
Why am I not surprised you are this uniformed.
Why am I not surprised there is always a Cackling dead lurking about trying to make trouble with hit and run statements that they are not willing to back up?
A Cackler by another name would cackle just as much.
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