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Selling November KO put options
- Thread starter farmerjohn1324
- Start date
It has nothing to do with the absolute price levels, whether high or low. It is purely about probabilities. This is what OP stubbornly refuses to understand and why he keeps on raking in losses. Beginners should stay far away from options. They just don't understand the math behind it.
Your looking this wrong. The Nov 45 outs are around $2.75. If it goes to $42 you could get the stock put to you at $45. You cost basis would be $42.25. Why do you think its better to sell a put when the stocks higher? If Ko is $75 and you sell a 70 put for $2 it stock goes to $68 you could own it. Owning Ko at $70 a lot more dangerous than owing at $45
It has nothing to do with the absolute price levels, whether high or low. It is purely about probabilities. This is what OP stubbornly refuses to understand and why he keeps on raking in losses. Beginners should stay far away from options. They just don't understand the math behind it.
Aside from the foolish oil futures trade where I held over the weekend...
I'm up about $11,000 in the past week.
It might be but if ko tanks to $42 in between you'll Possibly own the stock at $45 . Thats ok if its higher than $50 in nov . Your betting that it stays near here and they expire worthless by Nov. Your tying a lot money up
If I sell at a high enough price, there is very little chance they will expire worthless. Do you agree?
It might be but if ko tanks to $42 in between you'll Possibly own the stock at $45 . Thats ok if its higher than $50 in nov . Your betting that it stays near here and they expire worthless by Nov. Your tying a lot money up
After looking at it more, I should buy the call. Not sell the put.
Is my current thinking correct? That as the price of the stock rises, the value of the put option will decrease. Therefore, my only way to offset my sale of the put is to buy the put (which will have lost value if my prediction is correct) or wait until expiration.
At $50 in the current environment i certainly wouldn't touch the calls. Ko was just $36 2 1/2 weeks ago. If you believe the stock will be higher in Nov than now but don't want to own the stock i'd sell the 40's. Less premium you take in but less risk you'll get it put to you
Are you saying sell the calls?
Personally i'd sell the $55 calls as i highly doubt it will be there in Nov . Also if Ko tanks back to even $40 you can cover them. You understand you must leave i believe its 1/2 the money tied up in your account to cover the stock? You must weigh tying that money up vs the return you'll get.