I made $10,000 this morning

[UTmtnbiker]

D'oh! I thought I had the ability to trade options when I opened my account. Must've only done margins when I opened my Scottrade account (PM me if anybody wants a referral for 3 free trades). Was seriously considering the ones I mentioned above.

*Hurries to go fill out options form*

 

[JLGatsby]

Originally posted by: lozina
does the number under strike mean that it goes + or - by that much?

Can you recommend any books on this subject?

Which number under the strike? The one that moves? Usually a small number? That's the price of the contract, the trading price, the price you buy the contract at.

You can find lots of online tutorials for options for free.

The Chicago Board of Options offers a decent one.
http://www.cboe.com/LearnCenter/default.aspx

Here is a less formal guide to options.
http://www.tcbmarkets.com/education/opt...ategies/bullish_strategies/default.asp

But I would recommend you study for a long time before throwing money at it. It's not as easy as it looks. No such thing as easy money.

 

[lozina]

Originally posted by: JS80

Originally posted by: JLGatsby

Originally posted by: gigapet
what online brokerage firm would your recommend for this if I want to test teh waters at somepoint.

Any brokerage will do. I don't trade options, only stocks, but I use Ameritrade. Ameritrade also offers options trading and they're one of the biggest.

I would recommend gigapet read a book ...

Any titles in particular ?

edit: NM, you just responded to my previous query on this while I posted this!

 

[JS80]

Originally posted by: lozina

Originally posted by: JS80

Originally posted by: JLGatsby

Originally posted by: gigapet
what online brokerage firm would your recommend for this if I want to test teh waters at somepoint.

Any brokerage will do. I don't trade options, only stocks, but I use Ameritrade. Ameritrade also offers options trading and they're one of the biggest.

I would recommend gigapet read a book ...

Any titles in particular ?

edit: NM, you just responded to my previous query on this while I posted this!

No particular titles, just search amazon for options trading.

 

[vi edit]

888 Options is another good site to start learning from.

 

[JS80]

Originally posted by: UTmtnbiker
D'oh! I thought I had the ability to trade options when I opened my account. Must've only done margins when I opened my Scottrade account (PM me if anybody wants a referral for 3 free trades). Was seriously considering the ones I mentioned above.

*Hurries to go fill out options form*

If you've never had experience trading options, chances are you will be rejected for an options account.

I'd like to add a disclaimer since it seems like everyone is now running to invest in options. Although I am net positive in investing options, these $10,000 gains are far and few. In fact this has to be the largest gain I've ever had (percentage wise) on a trade.

Do you due diligence before you start trading options. Be prepared to lose a couple grand before you truly understand what's going on. You may never make money.

 

[Vich]

wow this sh1t makes no sense to me, rofl.

 

[GasX]

Originally posted by: gigapet

Originally posted by: JLGatsby

Originally posted by: Viper GTS
Of course the flip side to this is had that stock dropped any significant amount you'd be WAY in the hole.

Viper GTS

No he wouldn't. He didn't buy the stock, he bought an options contract.

He bought the contracts at .05, according to my math, he paid a total of about $350 for them. He would only be out his original $350 because the contracts would have expired worthless.

why doesnt everyone do this then?

Because most people who trade options lose money. The furthest most people should ever go with options is selling covered calls.

 

[gigapet]

Originally posted by: Mwilding

Originally posted by: gigapet

Originally posted by: JLGatsby

Originally posted by: Viper GTS
Of course the flip side to this is had that stock dropped any significant amount you'd be WAY in the hole.

Viper GTS

No he wouldn't. He didn't buy the stock, he bought an options contract.

He bought the contracts at .05, according to my math, he paid a total of about $350 for them. He would only be out his original $350 because the contracts would have expired worthless.

why doesnt everyone do this then?

Because most people who trade options lose money. The furthest most people should ever go with options is selling covered calls.

is that what the OP did?

 

[MaxDSP]

Originally posted by: preslove
The OP left to go spend some $$

Are there minimums for options? Can you buy a $50 call?

There's no minimums, but remember that each contract is usually for 100 shares. For $50, you're looking for a contract that goes for a $00.50 premium, which is the price point for lower value stocks.

As other have pointed out, be VERY careful when trading with options. I did virtual trading/papertrading before I started trading options with real cash. Once you start doing virtual trading, you get a better feel for how they work, more so than reading about them.

 

[gigapet]

Originally posted by: MaxDSP

Originally posted by: preslove
The OP left to go spend some $$

Are there minimums for options? Can you buy a $50 call?

There's no minimums, but remember that each contract is usually for 100 shares. For $50, you're looking for a contract that goes for a $00.50 premium, which is the price point for lower value stocks.

As other have pointed out, be VERY careful when trading with options. I did virtual trading/papertrading before I started trading options with real cash. Once you start doing virtual trading, you get a better feel for how they work, more so than reading about them.

where can I virtually trade options for practice?

 

[preslove]

Does anyone know of online courses on options and other types of stock trading? Do community colleges offer adult eduction courses for this stuff?

 

[Mill]

I was actually kind of shocked that they raised the bid. I figured they were going to stick with JNJ's bid even though it was a tad lower. I believe the reasoning was easier/quicker integration?

I guess with Abbot helping to bankroll that this one is over. I just can't see JNJ raising their bid.

It does say, however, that Boston Scientific's bid ends tonight and expires...

As a JNJ shareholder I say leave it alone at this point. No point in paying too much. I just don't see the value here. Let BSX take it.

 

[jadinolf]

Originally posted by: Leper Messiah

Originally posted by: Sheepathon

and OP, you want to lend me a few K?

No, ME!

 

[AdamSnow]

Originally posted by: gigapet

Originally posted by: MaxDSP

Originally posted by: preslove
The OP left to go spend some $$

Are there minimums for options? Can you buy a $50 call?

There's no minimums, but remember that each contract is usually for 100 shares. For $50, you're looking for a contract that goes for a $00.50 premium, which is the price point for lower value stocks.

As other have pointed out, be VERY careful when trading with options. I did virtual trading/papertrading before I started trading options with real cash. Once you start doing virtual trading, you get a better feel for how they work, more so than reading about them.

where can I virtually trade options for practice?

Text

 

[JLGatsby]

I was once sent an options trading gamed called "Darwin" from Ameritrade back in like 1997 or 1998.

I still have it but it only runs on Windows 95. Simplistic, but a fun game.

 

[GasX]

Originally posted by: gigapetis that what the OP did?

No.

A covered call is when you own a stock and sell the right to purchase that stock at a particular price. If the stock goes up, the option gets exercised and you sell your stock. If the stock stays below the exercise price, you keep the money and the stock. It is a way to generate income from your holdings, although it limits your upside.

example:

You own 1000 shares of XXX @ $25

You sell 10 contracts for March $27 calls @ $.50 (1 contract = 100 shares ; price is per share)

You get $1350 now (minus commissions, etc)

Now it gets complicated and I will over simplify:

Scenario 1: It's now March and the stock is still at $25. Your portfolio is still worth $25000. Your calls DO NOT get exercised. With your $1350 from above, you make $1350 more than if you had done nothing.

Scenario 2: It's now March and the stock is at $28. Your portfolio is worth $28000. Unfortunately, your calls get exercised and you get paid for them at $27. With your $1350 from above, you make $350 more than if you had done nothing.

Scenario 3: It's now March and the stock is at $30. Your portfolio is worth $30000. Unfortunately, your calls get exercised and you get paid for them at $27. With your $1350 from above, you make $1650 less than if you had done nothing.

Scenario 4: It's now March and the stock is at $22. Your portfolio is worth $22000. Unfortunately, your calls do NOT get exercised. With your $1350 from above, you retain your position with an unrealized loss of $3000 which is made less painful by the $1350 you got for your calls.

The bottom line is options are complicated. In this case they are used as a hedge. The limit both your upside and your downside and in some cases are a source of steady income.

 

[UTmtnbiker]

I've been/had been trading options for about 10 years now. Guess when I switched my account from TD Waterhouse over to Scottrade I overlooked filling out that form (or thought I already had).

I've been using derivatives as a hedge against my regular stock portofolio for about 5 years now, although I haven't actively been doing it for about the last 3. Just not enough time to keep on top of my positions on a daily basis.

Originally posted by: JS80

Originally posted by: UTmtnbiker
D'oh! I thought I had the ability to trade options when I opened my account. Must've only done margins when I opened my Scottrade account (PM me if anybody wants a referral for 3 free trades). Was seriously considering the ones I mentioned above.

*Hurries to go fill out options form*

If you've never had experience trading options, chances are you will be rejected for an options account.

I'd like to add a disclaimer since it seems like everyone is now running to invest in options. Although I am net positive in investing options, these $10,000 gains are far and few. In fact this has to be the largest gain I've ever had (percentage wise) on a trade.

Do you due diligence before you start trading options. Be prepared to lose a couple grand before you truly understand what's going on. You may never make money.

 

[GasX]

An important disclaimer on my explanation above:

Options pricing is VERY complicated as is primarily driven by the underlying price of the stock, its inherent volatility and news/rumor about the company. My example above uses made up numbers. If you were to look at several stocks for which options are traded, you would find a huge variability in options prices. For some stocks the upside would not be limited until a huge gain was reached. For others, ANY move in the stock upwards would leadto your options getting exercised. Take my example and apply it to some real world examples and you will eventually figure it out.

 

[waggy]

Originally posted by: Vich
wow this sh1t makes no sense to me, rofl.

heh me neither.

NOT something i think i will be doing. I know im not smart enough for this game heh

 

[MaxDSP]

Originally posted by: vi_edit
Options are messy. And can get expensive fast depending on premiums that you are paying.


You really, really have to understand what a stocks has to do for your option to be worthwhile before you think about doing options. You can loose money very, very fast with them.

If you buy a call - most you are out is the premium you paid for the option
If you buy a put - most you are out is the premium you paid for the option
If you sell a call - you can be out a virtually infinite amount of money (stocks have no theoretical max value you can hit)
If you sell a put - the max you can be out is the difference between 0 and the current value (if it's at 50 and it drops to 0, you are out $50 per stock, per contract)

Options are a way of leveraging - each contract is good for 100 shares. If you go short and the stock goes against you by $5, you are actually out $500. If you bought 10 contracts and it goes against you by $5, you are out $5000.

I dont understand what you mean by that. If you sell a call that you bought on the open market, the most you are out is the difference between what you paid for it and what you sold it for.

You buy a MAR 50 Call for $1 a contract, 1 contract. That's $100 (excl. comm's) you spend. You sell the call at a loss a month later for $ .80, which is $80, which puts your loss at $20 (excluding commisions).


Unless you're thinking of something else?

 

[JLGatsby]

Originally posted by: MaxDSP
I dont understand what you mean by that. If you sell a call that you bought on the open market, the most you are out is the difference between what you paid for it and what you sold it for.

You buy a MAR 50 Call for $1 a contract, 1 contract. That's $100 (excl. comm's) you spend. You sell the call at a loss a month later for $ .80, which is $80, which puts your loss at $20 (excluding commisions).


Unless you're thinking of something else?

He does not mean sell a call you bought, he means sell a call you wrote based on an underlying asset you already own.

Or in the case of a naked call, an asset you will be forced to buy in order to cover the transaction.

 

[vi edit]

Originally posted by: MaxDSP

Originally posted by: vi_edit
Options are messy. And can get expensive fast depending on premiums that you are paying.


You really, really have to understand what a stocks has to do for your option to be worthwhile before you think about doing options. You can loose money very, very fast with them.

If you buy a call - most you are out is the premium you paid for the option
If you buy a put - most you are out is the premium you paid for the option
If you sell a call - you can be out a virtually infinite amount of money (stocks have no theoretical max value you can hit)
If you sell a put - the max you can be out is the difference between 0 and the current value (if it's at 50 and it drops to 0, you are out $50 per stock, per contract)

Options are a way of leveraging - each contract is good for 100 shares. If you go short and the stock goes against you by $5, you are actually out $500. If you bought 10 contracts and it goes against you by $5, you are out $5000.

I dont understand what you mean by that. If you sell a call that you bought on the open market, the most you are out is the difference between what you paid for it and what you sold it for.

You buy a MAR 50 Call for $1 a contract, 1 contract. That's $100 (excl. comm's) you spend. You sell the call at a loss a month later for $ .80, which is $80, which puts your loss at $20 (excluding commisions).


Unless you're thinking of something else?

If you sell to close, yes you are correct. But if you write(sell) a call for a stock that is trading at $80 (google IPO) and it goes up to $450 (google now) you are responsible for every dollar in between if you don't close out your position before being exercised.

A stock can go infinitely up, and if you are in a naked position, your loss exposure is unlimited.

 

[MaxDSP]

Originally posted by: JLGatsby

Originally posted by: MaxDSP
I dont understand what you mean by that. If you sell a call that you bought on the open market, the most you are out is the difference between what you paid for it and what you sold it for.

You buy a MAR 50 Call for $1 a contract, 1 contract. That's $100 (excl. comm's) you spend. You sell the call at a loss a month later for $ .80, which is $80, which puts your loss at $20 (excluding commisions).


Unless you're thinking of something else?

He does not mean sell a call you bought, he means sell a call you wrote based on an underlying asset you already own.

I see :thumbsup:

 

[Gunslinger08]

I have a question:
I can buy a call on GDT at a strike price of $50 for $17.20. This would make the "total price" $67.20 (if I were to exercise), correct? So I would theoretically make about $9 per share if I exercised and sold instantly?