Options Know-How: Industrial Stocks

How much do you know about options trading? Here's a roundup of insights and ideas from TheStreet.com.
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How much do you know about playing the stock market with options?

The following are highlighted options insights and ideas from

TheStreet.com

.

From

Mad About Options: Steer Clear of Steel

(Video, Oct. 3):

Jud Pyle and Matt Buckley review Jim Cramer's recent bearish comments about

U.S. Steel

(X) - Get Report

and offer an appropriate options strategy. Pyle and Buckley also offer options ideas for

Yamana Gold

(AUY) - Get Report

and

Jefferies

(JEF) - Get Report

.

To watch the video, click the player below:

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For more information about

Mad About Options

, visit

www.ONN.tv

.

From

Slump in Railroad Stocks Raises Implied Volatility

:

Yesterday's

Oct. 1 move higher in volatility and

put

volumes in a bevy of diversified industrial stocks -- despite a relatively flat finish for stocks -- continued apace today, with traders seeking defensive positions in transportation names. Adding urgency to the options positioning today is the biggest intraday drop in the value of the S&P Railroad Index in two decades, sending implied volatility in the options of most railroad stocks hurtling toward 52-week highs.

According to live market data from Interactive Brokers, implied volatility in

Norfolk Southern

(NSC) - Get Report

rose nearly 28% on the session to read 71.7% -- handily a 52-week high and fully a 45% premium to the historic reading on the stock. With shares down 12.6% to $56.84, front-month

call

premiums are down more than 60%, with what appears to be buying interest in October 65 calls and selling in 55 puts.

Read the full version of

Slump in Railroad Stocks Raises Implied Volatility

(

RealMoney

access required).

From

Dykstra: Playing by the Rules

:

First, my strategy calls for buying deep-

in-the-money

calls. I

Lenny Dykstra usually pay a premium of $1 or less to purchase these options contracts. Sometimes it's a little over a dollar, but it doesn't happen all that often. That's a main part of my system and it's part of my ground rules.

I figure out the basic premium by adding together the

strike price

of the option I am purchasing plus the amount I am going to pay to purchase each contract. From that total, I subtract the price the stock closed at the previous day. When that calculation is done, I should have a premium of less than $1.

Read the full version of

Dykstra: Playing by the Rules

.

(To learn more about Dykstra's deep-in-the-money calls -- from Dykstra himself --

live

on Saturday, Oct. 25, register now for

TheStreet.com Investment Conference

.)

For more on options, bookmark and visit

TheStreet.com's

Options/Futures section

.

This article was written by a staff member of TheStreet.com.