RE: [CANSLIM] Options

From: "David Taggart" <dctag@mavericktrading.com>
Subject: RE: [CANSLIM] Options
Date: Tue, 29 Jul 2003 21:38:24 -0600

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Hello,

Options can be a wonderfully useful tool.  The key word is "can."  Most
people that trade options don't have a clue as to what they are doing.
As a broker I see a lot of people trade them and most are net losers.
Why?  Because they don't have a clue as to how they really work and
trade.  If you want to use CANSLIM and trade options I would recommend
you first become proficient trading stocks then start slowly trading
some options.  Many people just assume that options are essentially
leveraged stock and you get more bang for the buck.  That is of course
true if you are right but is the reverse when you are wrong.  Regular
risk management changes considerably when trading options as the price
tends to change a lot more and a lot faster then a regular stock.  I
have ranted enough but my main advice is before you trade options read
and watch them a lot before actually trading them and then when you
finally trade them trade small until you are very proficient.

Some good books are 

Options as a Strategic Investment -Lawrence Mcmillan
The Options Course -Fontanills
Option Volatility and Pricing -Natenburg

I have read all three and they helped a lot.  The next step would be to
paper trade for a while to get a feel for how fast the moves are and how
far out you want the strike prices.  Then of course you have to actually
put some money on the line to really understand how they trade.  But
definitely put in the homework.

Happy Trading,
David Taggart


- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of david rossing
Sent: Saturday, May 24, 2003 9:27 AM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Options

I was wondering, does anyone here use options when they are doing
CANSLIM?  I don't know a lot about options, so I am trying to figure
out if they are useful here, and could help set stop loss limits,
though not necessarily at an 8% price drop.  Thanks

Dave

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