Options - questions and answers - Page 5

I read the intro and i have to say it seems simple and more leverage than a stock purchase. But one thing you did not add is who you buy the option from. Who sells an option contract to a buyer? One of two people - either a person who has purchased an option and wants to liquidate (or close out) this position, or a person who has no position in the contract and who chooses to create, or write it. These people can be either professional option traders, who as "members" of an option exchange have the obligation to make bid and ask prices, or other investors like you. However, if you are purchasing an equity call or put contract to own it (in your brokerage account), it does not matter which of these people sells it to you. Once your purchase order is actually transacted at an options exchange, you own the option contract. The motivations for an investor to either purchase or write an equity option contract are many.

GA im looking at the call volume at 2,162 and the put volume at 102. This would be a great short call. For the buyer to get in low. Now what should i call a 10 or a 7.5? The bid is at 9.21 and ask is at 9.35.

short call? I am reading "GA im looking at the call volume at 2,162 and the put volume at 102. This would be a great short call. For the buyer to get in low."
but still do not fully understand, i'll answer both

Naked Shorting the option?

The less risk is shorting the 10 strike contracts but also means less reward
versus the 7.5

For buying the call option
If you believe the price will go above 10.00 or make a volatile move upwards
10 strike price holders will profit handsomely

7.5 you will be protected a lot more from a group think turnaround

Well im see all the volume in the 10 strike so it may be time to go up.

Wow it hit 9.50 in afterhours already...

looks like a good play wisconsin, it seems to have bottomed close to where it had in the middle of march. There is resistance at 10$. People also use options as a hedging tool. Someone who is short a lot of shares might buy 10$ calls so if it bounces hard for some reason, they aren't going to be killed to an unlimited extent. Owners of the stock might be selling calls (writing) for the premium.

make sure most of the volume are buys

get a platform where options symbols can be charted with strong technical capabilities

one i use for example: etrade

I just got my account set up for options, but i would rather not lose my a$$ on my first try, so I have been reading. Tell me if I am right or wrong. If ABC is trading at $24.00, and I buy the $20 strike price puts, I can only exercise the option if it is below $20, correct? Can I close out my position at $21 and just take the profit that built up in the premium, or do I have to wait until it hits the strike price of $20 for that also?

You can sell the option to someone else whenever you want, if it it doesn't hit the strike price. You can exercise the option you want if it's not in the money, but that would be pointless. Most people just trade options and never exercises them.

that answers my question, thanks

Been trying to get my feet wet with options over the last Month. Can anyone explain In-the-Money, At-the-Money and Out-of-the-Money.

My confused in how I can trade options without the option hitting the strike price. Any insight would be appreciated.

Many thanks to Mr.W

ok i have been looking into options trading and i think im changing over to this.
The potential is alot higher and less money involved.

the gains can be greater as opposed to buying a stock.

whens the next chat on options?

<3?

still really confused with options. Can any generally explain options in more simpler terms? Read through the first page of the thread and makes sense but i'd prefer something easier to read. Once i understand the general concept i'd feel that i would have a better understanding of options trading when i go back to re-read the thread?

http://www.cboe.com/LearnCenter/Tutorials.aspx#Trade is a great place too.

I've also been reading around a lot about options (read the first few pages of this thread over and over x.x), but I'm mainly confused about purchasing them. The buy window looks extremely confusing =(

ok so this is what i've learned so far.

buying a call contract on a stock
pay contract price $x(only things u pay at first)
contract states how many shares u can purchase i.e. 10,100,1000
u have two choice/options in this contract
1.) if u buy a call on a stock X for $10 and it goes up to 12 or higher, u can choose to purchase the stock at $10/whenever u want before the contract expires and can sell the stock right away for 12. or hold it.
2.) if the stock drops below $10 and u do not want to buy it u can let the option contract expire and just pay the fee of holding the contract.

a put is the opposite u want the stock to go down and if the contract says its giving u $10 a share and it drops to $9 a share, u can buy the shares at $9 and sell it back at $10.
if the stock price go up and over 10 u can just let it expire and pay the fee of owning the contract.

i tried to simplify it, let me know if i made any mistakes.

options are looking like a really good way to make money right now. anyone have any idea of how many shares are there in different types of contracts. do they go as low as 10 shares? I.E. 10,20, 50, 100, 200?????

im looking for some examples of contract prices and amount of shares in a contract. some help here