Options question please...>decay<

W

wajoonline

Hello, I have an options question please.

I am very confused and have started learning options.

If I was to sell an option call ( 30 day option call ) at a strike price of $20 for $7.00 (I understand the 7.00 will diminish due to decay).

\and lets say that $7.00 at the last week of expiration is now worth $3.00.

-Will the breakeven for the person who bought the call still be $27? If not what would it be. > because the price went down due to decay.

-To me it seems If I was to sell a vertical the decay would put me more in favour increasing my odds, because if the price went against me the breakeven has now reduced.

Am I right?

you help would be warmly welcomed.

thanks..
 
I never said I was trading, I am still learning. I already have my own material and don't need your promotion. You didn't even attempt to answer my question, Sad!
 
Last edited by a moderator:
wajoonline said:
-Will the breakeven for the person who bought the call still be $27? If not what would it be. > because the price went down due to decay.
More...

that break even point on expiration day is always the same
unless you are talking about day-to-day break even point

for starters, use some options software/ platform..
so you can learn & visualize how p/l curve changes from the beginning of the trade until the expiration day


wajoonline said:
-To me it seems If I was to sell a vertical the decay would put me more in favour increasing my odds, because if the price went against me the breakeven has now reduced.
More...

there is always a trade-off..
as you reduced some risk, you also reduce some of the reward


welcome to options :]
 
wajoonline said:
I never said I was trading, I am still learning. I already have my own material and don't need your promotion. You didn't even attempt to answer my question, Sad!
More...

Morse gave you links to two good sources of information, neither of which were self-promotion.

If you have your own materials and you are still here posting simpleton questions, you should review what he's provided to you.

And don't come here again acting like a stupid ass.
 
Hi, thanks for your input. Sure I have my own materials butI needed advise from professional traders, because I'm new and this is entirely complex for me. Indeed simpleton questions, but not for me. I'm so sorry I'm not at your level. I hope when I have knowledge I can clearly help others as well, instead of calling them a stupid ass and giving them promotional rubbish.
 
You are being called a stupid ass because of the way you responded to Robert Morse, not because you are asking basic questions. He gave you some good links to look at. Why would anyone want to help someone who comes here with your horrible attitude?
 
wajoonline said:
Hi, thanks for your input. Sure I have my own materials butI needed advise from professional traders, because I'm new and this is entirely complex for me. Indeed simpleton questions, but not for me. I'm so sorry I'm not at your level. I hope when I have knowledge I can clearly help others as well, instead of calling them a stupid ass and giving them promotional rubbish.
More...
No offense to you, I always have a tremendous respect for Mr. Morse. In my years of posting here, he was always a gentleman and very helpful so if you want to learn something, instead of badmouthing him, a little humility will do you more good.

In any case, I suggest you read the book by Larry McMillan, Options as a Strategic Investment. That was the book that clear up a lot of questions I had on options and got me on my way to be a full time options trader.

Good luck.
 
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