Just traded options for the first time...

[WildHorse]

Originally posted by: JS80


< Words here are cut out to conserve space >


Person A Option Holder, Person B Option Writer.

Person A has the option to exercise, and Person B risks being exercised on early.

Person A can only lose what he invests. Person B has unlimited loss (if he wrote calls).

Person A can never be forced by the CBOE to close out your position because you are an option holder. CBOE can close out Person Bs contract if he is assigned an exercised contract.

Not sure what you're getting at, but your comment before "Regardless whether you've bought or written a contract, when somebody holding a position opposite yours exercises THEIR contract, the CBOE may assign that to you, forcing you to close out your position. "

is wrong when you follow logic.

I think I can help you over one of your problems, which shows up where you say:

Person A Option Holder, Person B Option Writer.

Actually, A & B are BOTH "option holders." A buys the option that B writes, and both hold options contracts.

Either one may have opened their option position based upon analysis that the time premium they were paying as part of the option price was worth it.

But either has some risk of beign assigned to close out his contract earlier.

Relax & have a pleasant evening tonight! Cheers!

 

[JS80]

Originally posted by: scott

Originally posted by: JS80


< Words here are cut out to conserve space >


Person A Option Holder, Person B Option Writer.

Person A has the option to exercise, and Person B risks being exercised on early.

Person A can only lose what he invests. Person B has unlimited loss (if he wrote calls).

Person A can never be forced by the CBOE to close out your position because you are an option holder. CBOE can close out Person Bs contract if he is assigned an exercised contract.

Not sure what you're getting at, but your comment before "Regardless whether you've bought or written a contract, when somebody holding a position opposite yours exercises THEIR contract, the CBOE may assign that to you, forcing you to close out your position. "

is wrong when you follow logic.

I think I can help you over one of your problems, which shows up where you say:

Person A Option Holder, Person B Option Writer.

Actually, A & B are BOTH "option holders." A buys the option that B writes, and both hold options contracts.

Either one may have opened their option position based upon analysis that the time premium they were paying as part of the option price was worth it.

But either has some risk of beign assigned to close out his contract earlier.

Relax & have a pleasant evening tonight! Cheers!

wow. You're just wrong man. I've been trading options since I was 18. Your long option position cannot be closed out for any reason.

 

[Miramonti]

Originally posted by: scott

Actually, A & B are BOTH "option holders." A buys the option that B writes, and both hold options contracts.

Either one may have opened their option position based upon analysis that the time premium they were paying as part of the option price was worth it.

But either has some risk of beign assigned to close out his contract earlier.

Relax & have a pleasant evening tonight! Cheers!

That's not correct scott, JS80 is right. 100%.

First of all, if you write (sell) an option, you don't own it. You have an option position, sure, but you own nothing, so you can excercise nothing. Options are the right to own the underlying...only the owner of the options are the ones who can choose to redeem those rights for shares. If you don't buy them, you don't have ownership rights - its that simple.

So as a result, the seller is the only one who has assignment risk and the buyer is in the drivers seat at all times (regarding exercising) with no risk of having his position closed out if he doesn't choose himself to close it out...except when it expires on its own, in which case he will automatically get shares if the options are in the money.

 

[WildHorse]

jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

 

[JS80]

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

wtf?!?! what broker let you trade options with your [lack of] experience?!?!?

nm, i conclude you are joking.

 

[Miramonti]

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

I'm guessing you're joking too but I think everyone who has traded options a lot has paid for their knowledge many times.

Btw JS80, no, I don't play poker (or blackjack). I'm not much of a raw statistics person, even tho its a big part of options modelling/pricing.

 

[iversonyin]

Originally posted by: JS80

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

wtf?!?! what broker let you trade options with your [lack of] experience?!?!?

nm, i conclude you are joking.

Any electronic brokers. The only thing is he is probably scared of "assignment" risk every moment after he bought the option! He must be waking up in the middle of the night and sweating and scared to think about being "forced" to buy those GOOGLE shares he has call option on.

 

[iversonyin]

Turkish,

You overpaid commission by buying twice into the same option. And by giving out your stock symbol shouldn't hurt your trading becasue:

1) Half of ATOT don't even know wtf option is
2) Out of the half that know, they don't trade
3) Out of the rest that trade, they probably wouldn't use their own money just to sell the crap out of the stock against you to make you lose

You don't lose anything by giving your stock symbol away. If anything, it probably HELP to give it away.

Why?

Chances are some idiot will buy on your tip/insight/8 ball guesses.

 

[JS80]

Originally posted by: iversonyin

Originally posted by: JS80

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

wtf?!?! what broker let you trade options with your [lack of] experience?!?!?

nm, i conclude you are joking.

Any electronic brokers. The only thing is he is probably scared of "assignment" risk every moment after he bought the option! He must be waking up in the middle of the night and sweating and scared to think about being "forced" to buy those GOOGLE shares he has call option on.

lol.

I opened a fidelity account and they denied me Margin and Options trading :roll:

I have 8 years exp trading equity and 6 years trading options and a 780 fico score so i don't know wtf is going on. needless to say my money is no longer at fidelity.

scottrade still doesn't let me do any naked writing

 

[iversonyin]

Originally posted by: JS80

Originally posted by: iversonyin

Originally posted by: JS80

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

wtf?!?! what broker let you trade options with your [lack of] experience?!?!?

nm, i conclude you are joking.

Any electronic brokers. The only thing is he is probably scared of "assignment" risk every moment after he bought the option! He must be waking up in the middle of the night and sweating and scared to think about being "forced" to buy those GOOGLE shares he has call option on.

lol.

I opened a fidelity account and they denied me Margin and Options trading :roll:

I have 8 years exp trading equity and 6 years trading options and a 780 fico score so i don't know wtf is going on. needless to say my money is no longer at fidelity.

scottrade still doesn't let me do any naked writing

Naked writing is dangerous business. Unless you are writing call option on Overstock's stock. (LMAO at Overstock's CEO)

 

[JS80]

Originally posted by: iversonyin
Turkish,

You overpaid commission by buying twice into the same option. And by giving out your stock symbol shouldn't hurt your trading becasue:

1) Half of ATOT don't even know wtf option is
2) Out of the half that know, they don't trade
3) Out of the rest that trade, they probably wouldn't use their own money just to sell the crap out of the stock against you to make you lose

You don't lose anything by giving your stock symbol away. If anything, it probably HELP to give it away.

Why?

Chances are some idiot will buy on your tip/insight/8 ball guesses.

The only reason I can think of is something shady/illegal (acting out of insider knowledge). Or risk the shame of losing it all and can't brag (lie) about it later that he made money on his first trade? Don't know, it's suspicious either way.

 

[JS80]

Originally posted by: iversonyin

Originally posted by: JS80

Originally posted by: iversonyin

Originally posted by: JS80

Originally posted by: scott
jjsole,

Ahhh, so thaaaat's why I lost all that $$$! LOL

Thank for straightening me out.

wtf?!?! what broker let you trade options with your [lack of] experience?!?!?

nm, i conclude you are joking.

Any electronic brokers. The only thing is he is probably scared of "assignment" risk every moment after he bought the option! He must be waking up in the middle of the night and sweating and scared to think about being "forced" to buy those GOOGLE shares he has call option on.

lol.

I opened a fidelity account and they denied me Margin and Options trading :roll:

I have 8 years exp trading equity and 6 years trading options and a 780 fico score so i don't know wtf is going on. needless to say my money is no longer at fidelity.

scottrade still doesn't let me do any naked writing

Naked writing is dangerous business. Unless you are writing call option on Overstock's stock. (LMAO at Overstock's CEO)

Short activity in Overstock stock is no laughing matter. There is evidence that the Sith Lord is behind the activity in Overstock shares.