Options Questions
- Thread starter mcboston
- Start date
That's very surprising. Your course must be sponsored by the CBOE...jk. Options education for high school is an esoteric rabbit hole.
Seriously, the general public should be educated in defined contribution plans. Specifically, they should be aware of the historic switch between the defined benefit pensions of our grandparents and the self-managed funds we have today. A complicated management responsibility which demands you to be self-aware about where you are in your stage of life (a high schooler's biggest dilemma).
There is a glaring knowledge deficiency and I fear for the newer generations that are not aware how different their world has become. The baby boomers did "their own thing" but they always had a parachute.
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Thanks! Perhaps if you know this one you can tell me if I am on the right track.
How could you best use a long call to lock in a desirable stock purchase price for 2 months?
A) Buy any long call that might profit enough for you to afford your stock in 2 months
B) Buy a cheap, deeply out-of-the-money call that expires in two months on the stock you wish to buy
C) Buy a long call that expires in 2 months with a strike price at which you're willing to purchase the stock
D) Buy a long call that expires in 2 months with a strike price higher than the stock price you want to pay
I am leaning towards C and eliminated B but am not confident haha.
Thanks
How could you best use a long call to lock in a desirable stock purchase price for 2 months?
A) Buy any long call that might profit enough for you to afford your stock in 2 months
B) Buy a cheap, deeply out-of-the-money call that expires in two months on the stock you wish to buy
C) Buy a long call that expires in 2 months with a strike price at which you're willing to purchase the stock
D) Buy a long call that expires in 2 months with a strike price higher than the stock price you want to pay
I am leaning towards C and eliminated B but am not confident haha.
Thanks
Oh I love this!!!!!!!!! Thank you!
Its very very true.
Firstly, SHAME ON YOU for pursuing answers to these trivial questions by quizzing others, rather than actually learning material yourself, and answering, for good or ill, based on your own work.
Second, SHAME ON THE QUESTIONER as, in Question 3, there are two viable answers, but they depend (in their difference) on time, and by introducing time into the otherwise objective question, "the market" is a reasonable-and-necessary factor, and its direction, condition, sentiment, and outlook, ARE ANYTHING BUT objective.
Well! Egg on MY face! AND WAY GOOD ON YOU!
(I have taught at a top-tier B-school, a low-tier B-school, a community college, and even, a high school, so YOU ROCK.)
BTW, Investopedia SUCKS -- lots of stuff missing, too much stuff ENTIRELY WRONG. If you go to Interactive Brokers (or even Youtube) and search on Russell Rhoads -- he's got some *very* basic, *very* well explained options how-tos that are always well-done and correct.
Hi Tom
I understand what you are saying. This was my last resort to come to this forum to pursue answers - unfortunately I paid $300 for the course and won't receive credit unless I pass. So I am trying to use all resources I can as I am, admittedly, in over my head. I am not looking to offend anyone. I answered about 55 questions on my own and I am stuck on a few stragglers.
Thanks for the input on #3.
I understand what you are saying. This was my last resort to come to this forum to pursue answers - unfortunately I paid $300 for the course and won't receive credit unless I pass. So I am trying to use all resources I can as I am, admittedly, in over my head. I am not looking to offend anyone. I answered about 55 questions on my own and I am stuck on a few stragglers.
Thanks for the input on #3.
Just call them, and ask for the CBOT. TALK to a real human being, rather than try to find your curriculum answers on the Internet. +1 312 930 1000
No no no -- not at all!!! Egg be all over MY face.
I was Bart Simpson in school, and since being a college freshman (admittedly, "many moons ago...."), I have considered ALL teachers as absolute HEROES/HEROINES.
And so, to put time=money where mouth is, "anything you need" you just ask. We gotcha covered.
SO! There are some big truisms in all of this --
1) Options started as, AND REMAIN, insurance policies --
a put is like "comprehensive coverage" on your car -- if you wrap it around a telephone pole, you call your insurance company and say, "I _put_ my car to you" and they send you a check.
A call is like a sale/raincheck coupon -- limited term, but you walk in, put down your coupon, and say, "I want it for [no more than] this much."
2) The options market operates in that 2-dimensional Cartesian plane that's oh-so familiar, with price on the vertical, and time on the horizontal. (Call it, "The market.") BUT IF YOU PUT A BELL-SHAPED CURVE (a Gaussian distribution, ["Normal, with mean µ and standard deviation σ"]), then you just backdoor-ed some important Probability and NON-LINEAR thinking on your students. HA!
And, possibly randomly, others:
Time = Money = Energy = Mc² ("Everything has a price. Or should."[Darwin; 90-10 v 10-90] TANSTAAFL. Kevin O'Leary Cold Hard Truth)
Cerebella ante pecunia! {Brains before money!}
(conversely: "Don't mistake your account balance for brains.")
One-Third Gone is Half-way Back ("You can't always get what you want -- you better keep what you have.") {If you start with $1 and lose 33¢, you have to earn 50% on what's left JUST TO GET BACK TO FLAT. If risk=reward, you have to risk more than you wished, to return to where you started.}
Omnes numeri sunt exponentes! {ALL numbers are exponents!}
Life is a royal trumpet -- straight for a long time, then a big bell at the end.
(Thus, "Don't force a straight line.") We're humans -- we *try* to impute patterns wherever we can. But we are faulted in that we tend to think linearly, when in fact, ALL of nature can explode "exponentially" at any time. IN FACT!!!: "ALL numbers are exponents!")
Gamblers go for results -- the casino goes for process. Always favor process over results.
[Mathematical Functions -- exp./log.; inverses, etc]
Uh-oh.... the day is getting away from me.
Gotta go!