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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Oct 25, 2012 3:53 PM Flag

    Options vs stocks

    AL,

    One good trade and you are the expert...;-) You knew nothing about options a few months ago and you know little more now. Here is an example:

    """I've stayed away from MLP options because they lacked the consistency and pattern formation"""

    They(EPD, ETP PAA, and CQP) run up 90% of the time over the last 14Q's from one month out to their EXs. Lack a pattern, hello? So we got a 1 time in ten loss, this time, on two of the four(CQP and ETP, so far) and you throw rocks at a trade which has made money 90% of the time. PAA , CQP and EPD are still not done. When you buy to open, then, after a 10-20% draw-down, sell, you lock in that loss.... only to be whipsawed when you try to get in again. If you're playing a short run, you play the short run.

    I am ahead on PAA and EPD. I have taken some profit today. If I had followed your advice ,AL, I would have sold when I was 30% down or less, and have locked in a loss, without experiencing this profit. X would have been stopped out on the majority of his trades also, if he followed your stop ideas. When you have a short term strategy that has consistently worked, you hold. Yes you lose 10% of the time, but tough. If you can't handle 10% losses, don't play. Also, don't be so foolish as to burn more than 10% of your money per trade, because you can lose big with options. These 10% times are painful.

    These are the times when the "experts" and naysayers come out of the woodwork(actually from under rocks) with their toxic waste thrown on those suffering from their recent losses. "If only you had followed our advice" Hello!, Toxic advice? "If only you hadn't followed Doc". Don't! You can lose money at times...but you can also make money more of the time.....;-)

    How about the FSC trade for 9 days after EX, which was yesterday, I mentioned. I bought at 10.57, holding until one day B4 EX. No stops...let her rip one way or the other. Next month, do the same....we'll lose 20% of the time historically....last 12 months yielded 37% doing this....Shimei's welcome to follow...;-)

    DocReits

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