Quote:
Originally Posted by 6.8SPC_DUMP
One example that I can talk about now that it is illegal is having "puts" on a stock. SIRI was fluxing between 2 and 3 dollars for a LONG time. That's a 50% swing multiple times a year and most brokers would sit on the roller coaster. Why not buy it low 2's sell it high 2's, have a "put" on it high 2's ( a put is a "bet" that a stock would go down in a certain time frame ) and once the "put" ended buy it again if you like the price?
It's metals and currency for my short term and agricultural commodity's and whatever comes up long term.
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I'm highly confident that puts are not illegal. The problem with the strategy is the change in the part of the premium attributable to price change (delta) coupled with the decaying time premium (theta). A speculator would almost certainly be better off simply shorting the stock, and perhaps purchasing a distant out-of-the-money call for protection. Conversely, writing a put when the stock is in the low 2's might be profitable.
In essence, you're describing "swing trading". Nothing wrong with that - but the commission structure of full service brokerage firms make it unworkable. An online brokerage has a cost structure that fits the strategy.
Metals are nice; and I like the DBA etf for the long term, since it focuses on some of the agricultural commodities. As for currencies, you are FAR braver than I am.