Comments on: Deep-in-the-Money Calls Update: Microsoft Success and a New Idea http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/ An unscripted look into our investing journey Fri, 15 Jan 2010 10:49:46 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Another Deep-in-the-Money Calls Success http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/comment-page-1/#comment-186 Another Deep-in-the-Money Calls Success Wed, 25 Jun 2008 13:19:42 +0000 http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/#comment-186 [...] strategy that I explain in a recent post through my paper trading account at Investopedia. On April 22nd I outlined our first success with Microsoft calls and a second idea with Corning Inc. With the stock trading at $25.73 I bought [...] [...] strategy that I explain in a recent post through my paper trading account at Investopedia. On April 22nd I outlined our first success with Microsoft calls and a second idea with Corning Inc. With the stock trading at $25.73 I bought [...]

]]> By: Andrew http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/comment-page-1/#comment-121 Andrew Sat, 26 Apr 2008 00:08:47 +0000 http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/#comment-121 Thanks for the feedback Jeff. It's always good to get an opinion from people who have real world experience in these strategies. I thought something was too good to be true there. Fortunately I've been working this strategy with paper trading so if I pick a stinker it doesn't really matter. Better to make your mistakes with fake money. Thanks for the feedback Jeff. It’s always good to get an opinion from people who have real world experience in these strategies. I thought something was too good to be true there. Fortunately I’ve been working this strategy with paper trading so if I pick a stinker it doesn’t really matter. Better to make your mistakes with fake money.

]]> By: Jeffrey McLarty http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/comment-page-1/#comment-120 Jeffrey McLarty Wed, 23 Apr 2008 15:04:10 +0000 http://www.fulldisclosurefinance.com/2008/04/22/deep-in-the-money-calls-update-microsoft-success-and-a-new-idea/#comment-120 Okay okay, I got to tell you guys some stuff. In my humble opinion, I can save you a ton of grief (and money) by enlightening you through the benefit of my experience and (3 years of derivative trading) hindsight. The thought of getting 20% x 20% x 20% will make any investor gitty - and turn them stupid. Don't fall for the trap. The problem with your strategy is you'll use it, it will work, you'll rake in the dough and your trades will look something like this: 20% x 20% x 20% x 20% x (until you make a bad call) then you get a x -95% multiplier...do the compounding math (it hurts). You'd be far better off to short puts, or at least sell the front month call if you MUST go long any sort of call or leap. For some reason, all rookies, need to need to buy the calls - and get burned - in order to learn. I had the benefit of my father enlightening me (an ex-derivatives trader back in the 80's and 90's) during the period when me and my naive four friends were learning about options. We thought we were going to retire, we all raked in a few +50% returns, dirt easy. But then, for some reason I chose to listen to my dad and stop. And to thier avail, one by one, my friends lost a ton of cash and one by one either cashed out (with less than they started with, or were completely wiped out. I'm talking - nothing to withdraw) Now, I'm the only one without a complete sour taste in my mouth regarding derivatives. I can use them effectively to add +15% ~ +20% a year to any stock position I hold. The only reason I'm still in the game is without a doubt, I was the first to give up on the "go long plain vanilla" strategy. But, by all means, prove me wrong...and keep raking in the quick 20% gains. Okay okay, I got to tell you guys some stuff. In my humble opinion, I can save you a ton of grief (and money) by enlightening you through the benefit of my experience and (3 years of derivative trading) hindsight. The thought of getting 20% x 20% x 20% will make any investor gitty – and turn them stupid. Don’t fall for the trap. The problem with your strategy is you’ll use it, it will work, you’ll rake in the dough and your trades will look something like this: 20% x 20% x 20% x 20% x (until you make a bad call) then you get a x -95% multiplier…do the compounding math (it hurts). You’d be far better off to short puts, or at least sell the front month call if you MUST go long any sort of call or leap.

For some reason, all rookies, need to need to buy the calls – and get burned – in order to learn. I had the benefit of my father enlightening me (an ex-derivatives trader back in the 80’s and 90’s) during the period when me and my naive four friends were learning about options. We thought we were going to retire, we all raked in a few +50% returns, dirt easy. But then, for some reason I chose to listen to my dad and stop. And to thier avail, one by one, my friends lost a ton of cash and one by one either cashed out (with less than they started with, or were completely wiped out. I’m talking – nothing to withdraw) Now, I’m the only one without a complete sour taste in my mouth regarding derivatives. I can use them effectively to add +15% ~ +20% a year to any stock position I hold. The only reason I’m still in the game is without a doubt, I was the first to give up on the “go long plain vanilla” strategy.

But, by all means, prove me wrong…and keep raking in the quick 20% gains.

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