All right, the teacher is here! .0001 is my favorite number to buy at.Originally Posted by Dr. Dave
Dave, I am ready to get somewhat of a handle on options.
SIRIUS XM SATELLITE RADIO FORUM
All right, the teacher is here! .0001 is my favorite number to buy at.
Dave, I am ready to get somewhat of a handle on options.
Last edited by billhart22; 07-24-2009 at 11:57 PM.
First -
I need to see if I have a customer. So, before we even get into it, I'm going to write out a few questions, if I get an "aye"- then we can go forward. I figure I could spend weeks explaining stuff, so if there aren't any quailifiers, it will be slow going.
First - an options call contract is basically a contract between 1 person that holds 100 shares of a company, and is willing to sell ("sell to open") a contract - for a slight premium to someone who wants to buy a contract for the right (not obligation), to buy 100 shares of the company from him/her (the seller) at a certain price (strike price) by a certain date (options expiration which is the third friday of each month - but you can select contracts - provided they exist for forward months).
Why would you want to be a buyer?
1) you'd rather wait to see if the stock develops in price and then you get your shares at a lower price - maybe you are waiting on news, etc. If the news isn't what you expect, you would just lose the premium you paid, and that's that.
2) hedge your current stock - the opposite of a call contract is a put contract, here the buyer expects the price to go down, and that person gets to buy shares at the strike price to later sell at the open market price.
3) Just buy contracts and sell them later, pocketing the difference in price.
That's what I'm doing.
One last thing, there aren't a lot of these contracts floating around, most companies (stocks) that do have contracts are your big board established companies - even many stocks tooted by cramer or the fool or whatever don't have option contracts available. So, we are talking tickers like GS, AAPL, AMZN, MSFT, and the likes. You won't find them for say BEHL, or even companies that are mainstream.
So - before I go much further, lets see if I can get an "aye" -
If you can say yes to the following questions - I'll ramble as much crap as I can as fast as I can go. If there is just general interest, then it'll be slow going.
1) Are you interested in option 3 above - just buying and selling contracts
2) Do you qualify by your broker to do trade - if you don't know, I'll tell you some guidelines, so if you think you fit, then add this to your yes list... note, every broker will screen you, its subjective and usually taken on an individual basis. This is what they will be looking at:
a) how long you have been trading (ie. you can wipe out your account pretty fast, so unless you are funded like $50K, I don't see how they would clear someone with under a year of experience.
b) you're net worth, who knows, they may run another credit check, but they likely did that when you set up a margin account
c) if you already have a margin account
d) your balance (you can likely get away with $2k, but I'm no expert on how your brokerage operates)
If I reviewed your account, I'd likely give a thumbs up to someone with 5 years of experience and 2K in a margin account, but not someone with less years, likewise, if you had 20K in your account, then I'd say 2 years of experience is ok. Like I said, every brokerage is different
These are just questions from me - I'll put more energy into it if we are on the same page.
3) Do you and are you comfortable day/swing trade(s)?
4) Have you traded the big boards (and by this I mean, bought and sold a bunch - not say bought SIRI 5 years ago and averaged down, never sold, still hoping)
Some general links to look at:
http://en.wikipedia.org/wiki/Option_(finance)
http://en.wikipedia.org/wiki/Call_option
http://en.wikipedia.org/wiki/Put_option
http://www.cboe.com/
hahaha, you posted as I was writing. you also qualify, so I'll get onto it in a bit, have some other work to do.
but, as you can see- I;m good at procrastinating.
Aye, go for it. I will print these out as you go.
Oh yeah - the other questions -
I forgot what number I was on...
5) Do you have access to real-time quotes and charts (I guess charts is optional)
6) Do you have the ability to watch the trade all day - or put in a conditional order while you step away
I've lost a lot of money because I was either asleep, driving to work, etc. But, from here on out, I have come to the conclusion that for me, these are 1-3 day trades only, and the picks aren't there everyday... so I can plan accordingly.
You're a go on these too - scottrade has conditional orders - have you used one yet?
Yes, I use them for when I am not going to be home....over...
Hey Tony!
How are you doing bud?
I see you lurking....heheh...did you get any EVFL? It did about 2.5 billion today.
Hey Bill, Im always around....How you doing....no I didnt get any but I have a order in for mglg if it drops back to .0005 and behl if it get to .02...
Im basically focusing on siri for the next opportunity to sell premarket on the
6th I'll sell half of my shares if it get between .60 and .70 x 75k shares...and Im waiting for the prices to come to me...Ive been reading about evfl and from what i can gather they have about 100billion shares to put out there so im gonna watch for a while.....Im trying to learn options with you...but it seem to much for me....
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