Quick Please help me on my first options trade

C

chewbacca

I've never put on an options trade before but I think XLE will break lows for the year again so whats the best way to get short this thing with options. Buy december 45 puts?
 
Quote from chewbacca:

I've never put on an options trade before but I think XLE will break lows for the year again so whats the best way to get short this thing with options. Buy december 45 puts?
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Meet me in the alley at my VFW and hand me the money (cash in an envelope only) you want to "invest" in your options. I will give you a couple of hard kicks in the nuts and keep your money. At least you won't have to go through all the red tape of opening an account with a broker this way.

Rennick out
 
I bought 2 dec06 45 Puts after doing a quick search on options on wikipedia.

What is my risk on this trade. The market value is $75 - so is that the extent of my risk?
 
Quote from William Rennick:

Meet me in the alley at my VFW and hand me the money (cash in an envelope only) you want to "invest" in your options. I will give you a couple of hard kicks in the nuts and keep your money. At least you won't have to go through all the red tape of opening an account with a broker this way.

Rennick out
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LOL. The sad part of it is, he doesn't know how much better off he'd be with your offer.:mad:
 
Quote from chewbacca:

I bought 2 dec06 45 Puts after doing a quick search on options on wikipedia.

What is my risk on this trade. The market value is $75 - so is that the extent of my risk?
More...

I highly doubt your story as I'm sure anyone who trades options will also. You can't just trade them that easily. First your account has to be set up for options trading, which takes at least a week until they approve you. What was the symbol of the options you bought?

Sherlock Rennick out
 
Quote from chewbacca:

I bought 2 dec06 45 Puts after doing a quick search on options on wikipedia.

What is my risk on this trade. The market value is $75 - so is that the extent of my risk?
More...


you're delta is barely larger than your theta ... delta is .03. So for every $1 move the option price will move .03 cents, although your theta is working against you at .007

the stock will have to move $3 bucks for you to cover the bid/ask spread.

this stock hasn't seen 45 for over a year ...
 
Quote from chewbacca:

I bought 2 dec06 45 Puts after doing a quick search on options on wikipedia.

What is my risk on this trade. The market value is $75 - so is that the extent of my risk?
More...

When you buy options the extent of your risk is the premium you paid.

Plus, if you don't sell them before expiration, and they are in the money, they will be exercised. In your case I don't know if XLE is settled in cash or stock, but you will wind up selling the underlying. If you don't own it you will be short.

[It's too bad people are so quick to make fun but don't offer any help to a newbie. Are there many Brits on this board?]
 
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