Getting Back to Even Jim Cramer's Advanced option strategy
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Well, actually he could be honest and just extremely stupid. You decide which is worse. I know a lot about the stock market and even more about options. But I have nothing to sell! I can sadly tell you that buying Rogaine is a really expensive waste of money. I have no idea how to deal with baldness, I wish I did, but again I have nothing to sell. People that are flat out wrong or swindlers have stuff to sell. Here was the pitch that Cramer gave at the time. How much time did Dykstra spend on his pursuit of equity expertise?
In Google, which trades over dollars a share, this may happen in a matter of seconds. Well, anyone who understands options knows that aside from a small insurance premium the out of the money put. The bid ask spread in Apple is usually a penny or two wide. These markets are the least liquid option markets that exist in the universe. Chances are that the market in these calls would be This means you buy your ten options at If I pay 31 for my calls, I can really only sell them now for Just buying the stock is a million times smarter.
Either way, I cannot have a man like that working here. He jeopardizes the whole place. I challange Jim or Lenny to debate this with me live on CNBC in front of any option trader alive running more than a 20 million dollar portfolio there a thousands of them.
They might just take you seriously…you better start to check your spelling! Lenny uses DITM call because buying shares out right cost 10 times as much. Plus theres a higher ROI. Plus he has made overthis year alone. He also lowers his GTC sell order to capture the 1 point bounce. I seriously doubt my math is wrong — anyone who wants to provide evidence of this — if they are right, i will admit any mistakes. In terms of losing the whole outright position when it goes down is not true. Lenny can roll his options to later months strikes or lower his GTC order.
He has had in two years on this system only one loss. Current month wins of 8, As with any investment strategy you must look out for commissions and spreads but with limit orders this not as big a concern.
If you buy for 1. No call that you can buy for 1 dollar is a delta call — delta calls are at least 10 dollars. Time decay does not affect call that much untill the last month of the call option. Plus if a stock does not go up one dollar in six months do you really want to own it? How is the strategy insane if he is making money and over a two year period lost one time. Show me a broker with a record like that.
When the stock goes down he dollar cost averages in to the stock lowering his average cost per contract and lowers his GTC order. When the stock does bounce say a dollar or so, hes able to sell for a profit. The only real innovation to his strategy is selling at a set price. Name one manager that uses options that has as successful of a record. Buying more when the stock goes down is even more insane because it increases the damage when you are wrong. He is making money by shorting the fact that stocks will ever just completely fall apart — when that finally happens and it will he will get hammered.
That is exactly what mortgage brokers were saying about housing prices always going up — look how well that worked. No one has ever proven that they could time the market for large moves much less noise moves like a dollar. It makes no sense — trying to make a dollar in a dollar stock is completely different than trying to make a dollar on a 50 dollar stock — to have the same goal in both is outwardly insane. You could take a stadium full of people and have them flip coins until one is left — do you really want to argue that the winner is the best coin flipper?
Buying the stock and put is a hedge if the stock declines in value. Then the put will become worth more. This is not comparable to DITM options strategy. What does it matter if the market crashes and burns? Lenny focuses on dollar stocks. You do have to be well capitalized to make it work for you. But you can buy 5 contract instead of A married put is formed when an investor buys shares increments of or commensurate amount of a stock and at the same time, a put option contract.
I get the point of the bid and ask, but i dont get it when your saying that a call option is the same thing as buying a stock and a put. I have to say………I dont know a whole helluva lot about options BUT I have been betting sports for 28 years now………… When I saw the way he is marketing his stock selections it reminded me of sports services marketing sports selections…………. I couldnt help but say to myself……….
DTM calls provide additional leverage that Married Puts do not have. During this downturn and I have used straddles that have been hugely successful. But switched to DTM calls recently to get the rallies that are coming for this month. Btw, Stock trading is gambling, you win some, you lose some, The trick is to win more than you lose. Try doing that in Vegas. Your email address will not be published. Backpeddle Jim Cramer, Backpeddle!
After reading your article again your math is wrong. No call that you can buy for 1 dollar is a delta call — delta calls are at least 10 dollars 2. Buying more when the stock goes down is even more insane because it increases the damage when you are wrong 3. It makes no sense — trying to make a dollar in a dollar stock is completely different than trying to make a dollar on a 50 dollar stock — to have the same goal in both is outwardly insane You could take a stadium full of people and have them flip coins until one is left — do you really want to argue that the winner is the best coin flipper?
Where have you seen this? This is the first time ive seen it. What does it matter today if the market crashes and burns? A call option is not down side protection, a put is. What do bid and ask prices have to do with it when you use limit orders? The GTC order is one dollar above the buy order.
Not all bid and ask prices range that wide. And Lenny looks for low option premiums. What options strategies do you use? Trackbacks […] Lenny Dykstra is still a complete moron!
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