LEAPS TRADING: tell me more (tell me more)

[Bubble Bully]

I've been reading the turtle trading site, some guy named terry that is selling his services and investipedia. But I'm interested in learning more. Do you guys know of any quality books on trading LEAPS? I'm looking for something that I can actively manage, trade, and wrap my head around.

I'm interested in buying/selling call options and executing in short order- days and weeks.

Someone please lead me up the mountain; I can roll back down on my own.

[Korch]

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I'm interested in buying/selling call options and executing in short order- days and weeks.


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executing the options early after just buying them?

[Bubble Bully]

No not executing the option, but selling in a short amount of time vs holding long-term. Buying low and getting rid of it soon after it starts to trend up.

[mrbaseball]

LEAPS are just longer term options, usually expiring in a year or longer.

What you want to do is learn option theory as all LEAPS are just options. Since they are longer out they hold more time premium which decreases at a slower rate due to the length of the contract. They are also more vulnerable to moves in volatility.

I use LEAPS as both hedges and parts of speculative spread trades. But for these contracts you should have a good grasp of option volatility or "vega" because you can get a move supposedly in your direction while volatily drops and your option loses value due to the volatility changes. Visa versa is also very possible. In actuality volatility has more of a force on prices of these things than price movement in many instances. The closer you get to expiration price moves and time decay start to overshadow volatility.

Get a good options book and read up!

[Bubble Bully]

Thanks Mr. Baseball I got some books last night and I have began studying options. Where do most ppl learn how to trade options (college or on-the-job training?)

I should have been a finance major- time machine here I come...

[DcifrThs]

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Thanks Mr. Baseball I got some books last night and I have began studying options. Where do most ppl learn how to trade options (college or on-the-job training?)

I should have been a finance major- time machine here I come...

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on-the-job + training is probably the best.

but there are great books out there. the (i think it was hull's) "derivative securities" book is great and breaks down options pretty well.

Barron

[mal_noles]

Gotta agree with Dcfir, on the job training crushes anything you can really learn from a book.

But if thats not an option the Hull book is excellent and I would also recommend Option Volatility and Pricing by Natenberg. My old firm used that instead of Hull as its primary "textbook".

[Bubble Bully]

thanks for the suggestions. I don't have any on the job training to support me (poli sci major.) I'm going at it solo.

[DcifrThs]

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thanks for the suggestions. I don't have any on the job training to support me (poli sci major.) I'm going at it solo.

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i just reread your initial post.

you are DOA if you're trying to get from polisci to options trading in weeks. not even a chance.

your portfolio will likely be losing money since you don't have a) experience, b) a grasp on finance in general, and c) deep knowledge of options.

LEAP options in particular are VERY sensitive to changes in implied probabilities & interest rates given their time horizon.

if you want to learn...full steam ahead.

if you want to try and trade...i'd give you an emphatic, HELL NO.

Barron

[Sniper]

Bubble, if you want to read up on options, read the books by McMillan.

Do not jump in with money you can't afford to lose.