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option noob with a little niggle....
- Thread starter TGpop
- Start date
exactly... that's what I did personally.
But i'm following the stock, fundamentally.
So it was my opinion, though long term I want to hold this stock, that short term the conference call would generate some news that the market would react to unfavourably.
If the underlying stayed flat, I would just sell the put and lose on commissions and b/a spread
If it rallied, well then I didn't make anything, I had to take that risk.
If it fell, then I sell the put for a profit, thereby reducing my cost for the underlying. Book value still shows up as my original price I paid, and the "protection" shows up in the cash balance.
What I wanted was the flexibility to evaluate if I still wanted to invest in this company post earnings w/out placing a stop loss.
I wouldn't do it for every stock I have, I just had a strong opinion about this particular case.
But i'm following the stock, fundamentally.
So it was my opinion, though long term I want to hold this stock, that short term the conference call would generate some news that the market would react to unfavourably.
If the underlying stayed flat, I would just sell the put and lose on commissions and b/a spread
If it rallied, well then I didn't make anything, I had to take that risk.
If it fell, then I sell the put for a profit, thereby reducing my cost for the underlying. Book value still shows up as my original price I paid, and the "protection" shows up in the cash balance.
What I wanted was the flexibility to evaluate if I still wanted to invest in this company post earnings w/out placing a stop loss.
I wouldn't do it for every stock I have, I just had a strong opinion about this particular case.
maybe someone with more experience can shed some light.
some members here prefer to trade direction with the underlying, others will use options
it depends how much you're willing to risk, and how you protect yourself if it goes the other way.
There is no right answer.
if you're expecting large move upward then OTM calls can work.
If it's a smaller move, ATM or ITM calls can work.
you can also trade "bull call spreads" (long call vertical)
it's hard to say "you should buy calls", since there are other risks with owning options than just the stock.
edit: if you like the risk profile of a call, then call over stock+put makes sense for short term trade IMO.
some members here prefer to trade direction with the underlying, others will use options
it depends how much you're willing to risk, and how you protect yourself if it goes the other way.
There is no right answer.
if you're expecting large move upward then OTM calls can work.
If it's a smaller move, ATM or ITM calls can work.
you can also trade "bull call spreads" (long call vertical)
it's hard to say "you should buy calls", since there are other risks with owning options than just the stock.
edit: if you like the risk profile of a call, then call over stock+put makes sense for short term trade IMO.
I'm happy you asked...
There is a member here that wrote a book for rookies, his name is Mark. I personally have not read it, so others who have are free to comment on it.
The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options by Mark D. Wolfinger
I personally started with
Options Made Easy: Your Guide to Profitable Trading by Guy Cohen
and found it very helpful.
There's also lots of free information on the net
-Options Industry Council
-CBOE
-Interactive Brokers has some lessons
good luck!
There is a member here that wrote a book for rookies, his name is Mark. I personally have not read it, so others who have are free to comment on it.
The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options by Mark D. Wolfinger
I personally started with
Options Made Easy: Your Guide to Profitable Trading by Guy Cohen
and found it very helpful.
There's also lots of free information on the net
-Options Industry Council
-CBOE
-Interactive Brokers has some lessons
good luck!
Quote from erol:
I'm happy you asked...
There is a member here that wrote a book for rookies, his name is Mark. I personally have not read it, so others who have are free to comment on it.
The Rookie's Guide to Options: The Beginner's Handbook of Trading Equity Options by Mark D. Wolfinger
I personally started with
Options Made Easy: Your Guide to Profitable Trading by Guy Cohen
and found it very helpful.
There's also lots of free information on the net
-Options Industry Council
-CBOE
-Interactive Brokers has some lessons
good luck!
yeh guy cohen's book has been on my list and its pretty dirt cheap at the moment, does he explain time decay, the greeks,implied volatlity etc?