Show HN: Cappio – stock research that isn't overwhelming • Hacker News Board

Re: Show HN: Cappio – stock research that isn't overwhelming

#71

Post by drglitch » Sun, Oct 26, 2014, 7:47 AM UTC

encoderer wrote: post #58

minimax wrote: post #49

Earlier quoted context omitted.

There are some people doing it right, though. Check out TastyTrade.com. Your solution for retail investors who are getting burned in high beta tech stocks is to go put on a bunch of complicated options positions? That seems like kind of crazy advice. Maybe just buy some SPY and go do something more interesting than stare at options prices all day.

Sure, you can buy an index and forget it. Or, you can buy the index and then sell a covered call on it every month at 1 standard deviation out of the money. You decrease your basis and earn a monthly income, at the risk only of capping your upside if SPY surged upward. One sd out of the money options will expire worthless 85% of the time. No "staring at prices" required. It's not your fault if you're scared of option…

> Options have the same risk as the underlying.

Not really. Option pricing includes volatility (beta) and time-decay (theta) in addition to basic price sensitivity (delta). In plain english, an option has a premium not just based on how far from the money (from current price) the strike is but also how much underlying is moving AND how far away option expiry is.

Vol moves are not to be underestimated - if you look at option prices within a buck or two of Intel when they announced earnings, you'll see how implied vol changed.

Lastly, I believe options are too complex for retail, non-active investor to grasp not because of needing to buy 4 legs to form an iron condor or something, but from fact that there are inherently more built-in risks that are very hard to understand, vs simple "company does good, it goes up, company does bad, it goes down" proposition of a stock.

Lastly, i do agree with you that options present a very good set of tools, but like with any power-tool, you should know what you're doing before pressing that "on" button :)

Re: Show HN: Cappio – stock research that isn't overwhelming

#72

Post by encoderer » Mon, Oct 27, 2014, 2:15 AM UTC

drglitch wrote: post #71

encoderer wrote: post #58

Earlier quoted context omitted.

Sure, you can buy an index and forget it. Or, you can buy the index and then sell a covered call on it every month at 1 standard deviation out of the money. You decrease your basis and earn a monthly income, at the risk only of capping your upside if SPY surged upward. One sd out of the money options will expire worthless 85% of the time. No "staring at prices" required. It's not your fault if you're scared of option…

> Options have the same risk as the underlying. Not really. Option pricing includes volatility (beta) and time-decay (theta) in addition to basic price sensitivity (delta). In plain english, an option has a premium not just based on how far from the money (from current price) the strike is but also how much underlying is moving AND how far away option expiry is. Vol moves are not to be underestimated - if you look at…

You're missing an important fine point here: I am not advocating buying options. These strategies are selling options. So implied volatility and theta decay are your very best friends.

This "options are too complex" language is just silly. Retail investing doesn't work as it's been taught! It underperforms the market and professional investors, and it doesn't have to. You don't have to run complex positions, selling a vertical spread is every bit as easy as buying stock (one transaction to open the position, one to close it, and sometimes you don't need to close it.)

Anybody who wants to tell me options are risky has to explain this: Suppose you want to capture upside in, say, Amazon. Why is it riskier to sell a put spread or buy a call spread, in either case risking just a few hundred dollars, than it is to buy shares when just 25 will cost you $7500 or more?

The fact that you mistook the value of theta decay and IV in my proposed scenario of selling a covered call makes me think you just don't understand some of these things. And that's not your fault, it's a huge fail IMO that the retail investor has had to learn the finer points of front load vs back load on some overpriced mutual fund but has been taught that options are scary.

Again, I do not advocate for taking long option positions and I definitely think you should check out TastyTrade.com to learn a bit more about the philosophy.

Re: Show HN: Cappio – stock research that isn't overwhelming

#73

Post by areyousure » Tue, Oct 28, 2014, 8:29 PM UTC

yummyfajitas wrote: post #68

jamesaguilar wrote: post #59

Earlier quoted context omitted.

I thought that yummyfajitas' point was that fundamental analysis doesn't work, like all public forms of stock market analysis. Financially illiterate people are even less likely to understand that, which means that making the "insights" accessible is actually worse for the user than having them not be accessible.

Roughly what I was saying. I don't actually think all forms of analysis don't work, and I currently run a strategy I do think works. Note the strategy involves no web design or pretty colored boxes. I run it like this: $ python compute_trades.py Then I manually enter the results into my broker. However, you are correct that I believe accurately communicating dubious information is nothing more than duping credible id…

Out of curiosity, where does your script get data (prices and whatever else)?

Re: Show HN: Cappio – stock research that isn't overwhelming

#74

Post by yummyfajitas » Sat, Nov 01, 2014, 2:03 AM UTC

areyousure wrote: post #73

yummyfajitas wrote: post #68

Earlier quoted context omitted.

Roughly what I was saying. I don't actually think all forms of analysis don't work, and I currently run a strategy I do think works. Note the strategy involves no web design or pretty colored boxes. I run it like this: $ python compute_trades.py Then I manually enter the results into my broker. However, you are correct that I believe accurately communicating dubious information is nothing more than duping credible id…

Out of curiosity, where does your script get data (prices and whatever else)?

Quandl for now, but fairly soon I'll be collecting realtime prices from interactive brokers.

(My strategies generally run on a daily basis, so daily data is good enough for that. But soon I'm going to switch to a full algo strategy, which will require realtime data to backtest.)

Re: Show HN: Cappio – stock research that isn't overwhelming

#75

Post by areyousure » Mon, Nov 03, 2014, 2:38 AM UTC

yummyfajitas wrote: post #74

areyousure wrote: post #73

Earlier quoted context omitted.

Out of curiosity, where does your script get data (prices and whatever else)?

Quandl for now, but fairly soon I'll be collecting realtime prices from interactive brokers. (My strategies generally run on a daily basis, so daily data is good enough for that. But soon I'm going to switch to a full algo strategy, which will require realtime data to backtest.)

Thanks for your response! Good luck.