Because theres a chance it will drop more during this contract period with the etf holding volatile energy stocks. To ‘lower the risk‘ slightly, you could buy an AT/In the money call. You lose out on gamma buying a call already in the money but theres enough volatility in this sector Im not concerned with gamma and like his call. Hope that makes sense.
wouldn't it make more sense than to wait til the price lowers then? if we are buying all the way to Jan i don't see why the rush? because it's cheaper now?
I cannot speak for Greg M, but my guess is he doesnt buy long dated options necessarily with the intent to hold all the way to Expiry (unless the trade is working out that way), but rather, he buys long-dated contracts so the volatility has more time to work itself out and converge towards the strike price. This isnt a right or a wrong type of thing. But I agree with this type of strategy imho. People get sucked into short term, OTM options b/c theyre cheaper and the volatility potential. But the *probability* of success is much lower for many reasons, the most obvious one being the time decay from the high theta in short term options. I hope this helps. This isnt an easy topic to type out lol
it's a good thing my transfer didn't come thru today. but i did buy microsoft at 190 call....not sure about this one! so tomorrow, I may buy xle as advised.
OK, bought 1 call.... i see why GM like chart wise... scary, i start to think like him. I womnder if he has any news or got a phone call from another trader and knows something we couldn't possibly know
debating, down on MSFT, not a lot, i thought GLD looked good, but I'm down a bit. I'd prefer to be in a better place for a spec play.. what would would Greg do
I wouldn't worry about that too much yet if you're down immediately at the start. A lot of my positions start off losing but end up gaining. You just have to give it enough time to play out at first. On something like XLE, it's really a speculative play so I wouldn't put down too much money on it.
i wonder why he says 38 til Jan when it's trading above 38 now.
Because theres a chance it will drop more during this contract period with the etf holding volatile energy stocks. To ‘lower the risk‘ slightly, you could buy an AT/In the money call. You lose out on gamma buying a call already in the money but theres enough volatility in this sector Im not concerned with gamma and like his call. Hope that makes sense.
wouldn't it make more sense than to wait til the price lowers then? if we are buying all the way to Jan i don't see why the rush? because it's cheaper now?
I cannot speak for Greg M, but my guess is he doesnt buy long dated options necessarily with the intent to hold all the way to Expiry (unless the trade is working out that way), but rather, he buys long-dated contracts so the volatility has more time to work itself out and converge towards the strike price. This isnt a right or a wrong type of thing. But I agree with this type of strategy imho. People get sucked into short term, OTM options b/c theyre cheaper and the volatility potential. But the *probability* of success is much lower for many reasons, the most obvious one being the time decay from the high theta in short term options. I hope this helps. This isnt an easy topic to type out lol
And just like that, XLE closes BELOW 38. That price action sums up what I was trying to say. 🤘🏽
it's a good thing my transfer didn't come thru today. but i did buy microsoft at 190 call....not sure about this one! so tomorrow, I may buy xle as advised.
but again, the options contracts will be lower for 38 tmrw, no?
Love this trade. I've been accumulating ERX Jan 2021 calls for weeks. Stayed in the trade because of GM. Hat tip to GM for his clairvoyance.
OK, bought 1 call.... i see why GM like chart wise... scary, i start to think like him. I womnder if he has any news or got a phone call from another trader and knows something we couldn't possibly know
debating, down on MSFT, not a lot, i thought GLD looked good, but I'm down a bit. I'd prefer to be in a better place for a spec play.. what would would Greg do
I wouldn't worry about that too much yet if you're down immediately at the start. A lot of my positions start off losing but end up gaining. You just have to give it enough time to play out at first. On something like XLE, it's really a speculative play so I wouldn't put down too much money on it.
did XLE, took a small IPO, that is jussssss fine with me!!