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re: I'm seeing a bargain with this stock, what am I missing?
Posted on 4/5/13 at 1:39 pm to OnTheBrink
Posted on 4/5/13 at 1:39 pm to OnTheBrink
quote:
So, lets say I wanted to buy 100 shares using options. I put up $4.00? Or I put up $900?
And if it doesnt hit $9, I lose $900 or $4?
You put up $4 for the contracts, then if AA hits $9, you buy 100 shares for $900.
If it doesn't hit $9/share, you lose the $4 on the contracts.
1
Posted on 4/5/13 at 1:45 pm to Vols&Shaft83
quote:
If it doesn't hit $9/share, you lose the $4 on the contracts
So, how do you make money then? And I realize AA is probably a poor example as there seems to be little volatility.
Let's say I bought these contracts today at 0.04, $4. On April 19th, after a strong earning report Monday and a good forecast, AA has been moving up and rest at $8.90/share. Would the cost of my contracts then be worth more? Maybe 0.10?
I don't know, as Russian said, if you think it is going to be at $9 in 15 days, why not buy the shares outright. Seems like a lot of work for minimal gains.
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