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Options trading
Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Is there anyone who trades options? I would like to get a quick tutorial of what it entails. I heard that options is where the money is at, someone tried to explain it to me but he didnt do a good job coz I have more questions than answers. So far I understand puts and calls but I dont really understand how you execute the order. He said something about insuring your calls, how does that work?? Does anyone have any experience with this? I dont really feel like reading on it coz most authors give you BS advise. He also said that you dont lose money in options, how true is this? And how are you able to buy options at a tenth price of a stock?? Hisah?? Drunkard?? Anyone??
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Rank: Member Joined: 3/20/2009 Posts: 348
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@Nabire i trade options but i would rather you read first about options trading because it would be hard to explain if you dont understand the basics.go to optionsmonster.com and study during your free time.
The person who told you that you dont lose money in options lied to you.You can lose money if the trade goes against you and your options expire worthless.The good thing about options is that your risk is defined(you can choose how much money you are willing to lose but if the trade works because of leverage(one option contract equals 100 shares) you can make alot of money %wise ) Am sure you know also that if you stretch your bet then you can also lose alot of money.
This is how the pros play stocks with high share price like apple,google,pcln etc
I have seen someone turn 2k(dollars) into 45k in a matter of hrs,i have seen someone turn 1 million dollars into 25k in less than 24hrs.Most people lose money in option trading and i prefer using them as insurance/hedge against my long or short positions
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Hey you've just made my day. I plan on reading up on it, actually I will take a class on it but I just wanted to find out the quick facts about it. And the guy said you dont lose money coz you can make a putand call on a stock so even if it goes down, you still make money but now that I think about it, if it goes down, you lose the bet that you put in that it will go up right?? But then he said something about insuring your bets. Is there any way you can just give me the basic key points of how it works? Im honestly slumped with school right now it wil be a while before I read up on it
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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I just logged to the site you gave, its by the Najarian brothers and Guy Adami!! These guys confused the heck out of me during the recession, and plus its a pay to play site. Yani I just want somewhere to get basics on it before I even attempt to involve a "professional". Looks like I will have to open the books, thanks though.
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Oh I found the self help section, will read through it. So far it looks like options make money with volatility??? A stock that doesnt move is not a good candidate?? That means the last few years when the VIX has been high, people trading options have made alot of money?? So my thinking is penny stocks are the best candidates for options coz just a change of 0.01 gives a big % change?
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Oh I found the self help section, will read through it. So far it looks like options make money with volatility??? A stock that doesnt move is not a good candidate?? That means the last few years when the VIX has been high, people trading options have made alot of money?? So my thinking is penny stocks are the best candidates for options coz just a change of 0.01 gives a big % change?
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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@Nabwire, may be futures are better. Share the knowledge "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Bado najaribu kuelewa how they work, ni vile hiyo class ya options siichukui mpaka next year but in the meantime najua there is alot of money to be made coz its an election year. Hizi ni zile pesa za siri, only a few know how to play the game, but hizi pesa za masonko wa US lazima tuzipate au sio...LOL. Go through the site he gave,education & webinars kisha ugo through Options 101 and the other classes, maybe tunaweza saidiana tutengeneze pesa before Nov 6. So far what I got is 1 option equals 100 shares, so basically you are buying the share at one hundreth of its regular price. Halafu from the example they gave, if Google is selling at $500, and you put in options at $25 ( here im not sure what the $25 stands for as opposed to a $10 or $5) then Google goes up to $550, you will have doubled your seed money. But if it goes down instead of up, you will have lost your money, and here is where it gets a bit tricky with covering calls etc, im still reading on it. So fanya homework, maybe Itz will be kind enough to come back and answer questions.
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Rank: Hello Joined: 8/17/2012 Posts: 9
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itz wrote:@Nabire i trade options but i would rather you read first about options trading because it would be hard to explain if you dont understand the basics.go to optionsmonster.com and study during your free time.
The person who told you that you dont lose money in options lied to you.You can lose money if the trade goes against you and your options expire worthless.The good thing about options is that your risk is defined(you can choose how much money you are willing to lose but if the trade works because of leverage(one option contract equals 100 shares) you can make alot of money %wise ) Am sure you know also that if you stretch your bet then you can also lose alot of money.
This is how the pros play stocks with high share price like apple,google,pcln etc
I have seen someone turn 2k(dollars) into 45k in a matter of hrs,i have seen someone turn 1 million dollars into 25k in less than 24hrs.Most people lose money in option trading and i prefer using them as insurance/hedge against my long or short positions Itz, i dint know there are Kenyans who trade 9in options! that's a first, please elaborate who and where and how it is managed. and i think there is some true in what Nabwire was told. with some complex options like collars, you can almost not loose. but remember,like all derivative products, it boils down to what you are using them for. like a Knife! Daring ideas are like chessmen moved forward. They may be beaten, but they may start a winning game.
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Pliz Itz or Jirani interpret this table for me? For example at $8.50 it says the last was 0.41 and its down 0.14, what does that mean? The stock itself is down 0.14, is that the same 0.14 for the option? But at $8 there are two quotes, the first one was last at 0.91 and down 0.16, then the second one the last was 0.97 down 0.01, what does this mean? Why two different prices?? Oh by the way im quoting the calls. Then can you buy the options at any time with a 30 day expiration? Pliz lemme know. http://finance.yahoo.com/q/op?s=BAC+Options
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