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... which is exactly why I am starting to learn about options ...

If I am reading all of this properly, in the long haul it boils down to zero sum if the all trades are thoughtful and reasonable. This a factor of a 50:50 chance of choosing direction correctly.

gotcha ... thanks

Then taking profits at 10% up and losses at 5% down would represent a reward:risk ratio of 2:1, right?

Something isn't making sense to me here. You said, "you have to subtract the value of the call every day ... also the value of your stock you have to add every day". Account balance includes cash balance, right? Would "value" you mentioned be the change in the call value and stock values? Would...

Thanks for your replies. cvds16: You are right. I am confused. I am a newbie attempting to learn by paper trading and recording everything on a spreadsheet. You said "everything is marked to market every day. That should be the key to your account balance." I thought that is what I did. What am...

This question is presented to learn how market movements and assignments are reported when viewing an account on a daily basis. I am presenting a hypothetical example to frame my questions. Commissions are intentionally omitted to simplify things here. buy 100 shares XYZ @ $48.50, sell 5/20...

Thank you for continuing this discussion. Once again, this is a learning process for me.The main purpose of my question is to determine realistic strategies under real market conditions in a real trading account. Let's use your example of 'take profits when your up 5% and take losses when your...

This entire endeavor is a learning process for me. A brief background may be helpful for you to understand my level of understanding before I address your questions. I have no previous experience in trading vs. investing. I have been paper trading for about 20 days to get a basic feel for...

gotcha

long stocks with perceived short term price increases (for potential covered calls in the future with greater profits and/or capturing dividends) and covered calls only some bias toward stocks paying dividends where record date and ex-dividend date fall within the term of the contract expiration...

Thanks again. This will be one of the questions for me to ask when I move from paper trading to opening a trading account.

Thanks for the quick reply. This checks one more thing off my things to understand list. Is the commission on the assignment the same as any other trade?

If I am holding an open long position and choose to assign the position, is it guaranteed that it will happen? Roughly how long does it take for the transaction to settle? Does open interest come into play? Thanks for your replies.

I don't see any scenario in which I would deal with margin accounts or expiration dates greater than 50 days in the future. Also, I will be staring with a maximum $50,000 account balance (realistically, more like $35,000-$40,000). How would cash reserves of 20-25% of total account work out for...

Thanks for your replies. I don't mind managing 10-20 open positions at a time while paper trading for experience before entering the real marketplace. My current mindset is to find and open a few positions at a time which look profitable and provide what appears to be reasonable exits if...

Thanks for your replies. Please give me a general idea of what constitutes "the big, liquid stuff". Is it open interest and volume? If so, what kind of numbers are a guideline on both stocks and options? Thanks for answers to these questions.

When entering an option position who takes the opposite position? people trading in the marketplace? or the board of exchange if there sre no takers in the marketplace? Thanks for your replies and advice.

I agree with that. I view this as similar to playing poker. Don't use scared money, and don't over think things which i can't control. ...AND... Remember that I cannot bully or bluff the market!

Starting out with paper trading, I am confining myself to covered calls and long stocks only. I don't believe I will be allowed to enter other positions as a newbie in a new account once i begin to deal with real money. With that in mind, I am wondering about cash balance in a real world...