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Can someone here use Ga. redneck lingo to explain options trading to me?
- Thread starter WallsGa
- Start date
Subd
In simplest terms they are contracts to buy (calls) or sell (puts) stock at a certain price (strike price) AND by a certain date (expiration). You are basically wagering that a stock will be at a certain price point by a certain date. There is no way you can become educated on trading options in a single thread. I’ve been trading them for years and still learning.
The primary reason they have exploded in popularity recently is because of all the new traders taking advantage of leverage. Each options contract is worth 100 shares. For example, you can buy a call option for a couple hundred dollars and “control” 100 shares versus buying 100 shares out right. That is what makes them so alluring and that is also why most people blow up their accounts.
The primary reason they have exploded in popularity recently is because of all the new traders taking advantage of leverage. Each options contract is worth 100 shares. For example, you can buy a call option for a couple hundred dollars and “control” 100 shares versus buying 100 shares out right. That is what makes them so alluring and that is also why most people blow up their accounts.
Whats the downside other than the big paid to buy a put or call?
If I short a stock I am borrowing and agreeing to pay back by a certain date?
You might be confusing two different things. Shorting a stock typically involves you borrowing shares from your broker (on margin) and then replacing those shares by buying them at a later time for a lower price. If the stock moves up then you have to buy them at a higher price to pay your broker back so you lose money. There is only one way to make money here. The stock has to go down.
In an options trade you could short the stock several different ways and there are several ways you can make money. Credit spreads, debit put spreads, buying puts, or sell naked calls (highest reward, but highest risk). Some are much riskier than others but you could also short it in a way that you couldn’t lose more than you put in. In a naked options trade you can lose much much more than you put in (i.e., to the moon!) In a spread, your risk is limited but so is your reward. Options are the most versatile trading strategy IMO. You really have to learn by experience though.
buy low, sell high
I don’t know if Baldwin county schoolin’ got that explanation but I’m still in the dark with my dekalb county public education
maybe it was buy high and sell low
Opshuns is iffy horse**** agreemunts to get suckers of agreemunt to buy or sell stock at price favorable to big money broker Opshun buyer bends over to a premium by seller for the fun Opshun seller bends over even more. Just bend over cuz here it come from hedge fun agin
