Beginner Options questions

With an option pricing formula, you can determine precisely what the price of the option will be after a 10% move. All you need is the amount of price change, days elapsed, and future implied volatility ... plus a small adjustment for the bid/ask difference/ These are all just a coupla minor details needed on the way to getting rich :D
 
Thanks for the detail..
I always knew the tantalizing nature of options.. I wonder where the volume was? I have noticed there is usually volume in a limited number of strikes.. Also wonder who would have sold those 80 puts! It was literally a no-brainer trade against the seller.. FWLT was NOT staying above $100.
 
OTM options is a suckers game. Read Cottle's book. He was one of the founders of thinkorswim and while not a beginners book is probably one of the best single resources available.
 
Quote from retire45:

I have noticed there is usually volume in a limited number of strikes.. Also wonder who would have sold those 80 puts! It was literally a no-brainer trade against the seller.. FWLT was NOT staying above $100.
More...
Near and somewhat OTM (out of the money) options tend to have more activity than ITM. And it may have been a no brainer trade not everyone is as competent as you :)

Also, there are more complex option strategies than simply buying options. If you understand covered calls, the mirror image strategy would be short the stock and short the put. In such a position, the seller could be the other side of your OTM put purchase yet both of you are bearish.

Either way, make sure than you fully understand the options and strategies that you are considering as well as subsequent adjustments and money management. There is a tremendous allure to buying OTM options but w/o an edge, it's a losing game.
 
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Ring a bell? :D

The Doctor is in. lol
 
A unit of cash, a unit of cash
What an idea, it's so brash!
Follow me, all you heathen
Spend a year, hope to break even.
Guard your stash, pray no crash
Be like Monkey, be a horse's ash!


Greetings and salutations! :cool:
 
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