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Speaking to quite a number of option traders every week gives a good feel for what topics are of interest or importance. One thing I notice with those new to trading options, and some not so new, is that many don’t leave enough time to expiry when opening positions.

After holding its head high for several weeks and demonstrating a mind of its own, the All Ords caved in and followed Uncle Sam down on Thursday taking a 42 point caning. The big hit was not so much because of on-going fears of a rate rise as that is now an old story, but rather a wake up call on global growth when China made a notion they would be moderating their growth rate. Not a big deal really when you consider the Chinese economy grew at 9% in 2003 and will probably turn in a rate close to 8% in 2004. Not bad when you consider the world’s largest economy (the USA) will grow this year at about 4.5% and struggling Europe at less than 2%.

This week Aaron Lynch and I have been running the first of the Interactive Trading Workshops in Melbourne. It has been three days packed with information, as I''m sure all those who attended would agree. One of the topics covered during the sessions was trading using Two and Three-Day Swing Charts. One of the clients who had just finished the lesson on this subject immediately identified a terrific trading opportunity on the SPI200.

Recent weeks in the market have seen some very interesting local movements. A confession I have to make is that I have not been keeping a very close eye on the Australian equities market. Recently the US equities have really caught my eye. It is hard to argue with the liquidity and overall scale of movement across the major stock exchanges. The ABC trading system has been highlighting many profitable trades using the basic rules of the Starter Pack.

You don’t have to travel far into the option world to hear statistics like “70% of all options expire worthless” bounced around. Does this mean every option that expires worthless is a losing position? Of course not! Having said that, we can use this statistic to our advantage.

Now we all know that selling uncovered options can be very dangerous, especially for beginners. The argument for using naked option strategies is that when using options close to expiry, the premium received coupled with time decay will more than cover for any large movements against the position. While this is true, it is not a trading method for the faint hearted.