re: SLV

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I sell Lsut81 1 contract SLV for $20 per share by December, 21, 2013 for $.10/share.

You would give me $10 (.10 x 100) for the premium. On or before December 21, 2013 you would have the option of buying 100 shares of SLV for $2000 ($20 x 100) from me.

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So I can buy the shares for $20 anytime prior to Dec 21st?

If the price isnt above $20 by dec 21st and I don't want them, they I can just walk away and lose $20?

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No, you would lose the premium you paid for the option which is $10, $.10 X 100 shares.

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Thats what I meant...

Basically, I am not forced to buy the 100 shares at 20 bucks, only pay a "Penalty" of 10 cents a share that I could have bought.

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Right. The option (pun intended) whether to buy or not is yours as the owner of the option.

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And you can sell off your options if you'd like, correct?


So my question, and I'm obviously missing something, is how is this claimed to be so dangerous?

If I had a few thousand that I was willing to risk and didn't want to tie it up in a stock, this would be a quick and easy way to make money

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Purchased options are not dangerous, or at least your maximum risk of loss is known from the start.

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However, if you write (sell) options, your risk can almost be unlimited, especially if you sell a naked option, meaning you don't already own the underlying security and you'd have to go into the market to buy it if the buyer of the option you sold to exercises his option

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And I'd bet the latter is where the real money can be made

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.....or, lost.

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I may try buying some options in the next week. I'll just be content with losing a few hundred dollars for the hell of it

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However, if you write (sell) options, your risk can almost be unlimited,

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"Can" is the key word here. If you start buying calls and puts, and grow to like it, you might want to explore selling calls and puts. What I would suggest is that as a beginner you trade your buy ideas, either calls and puts, with fake money for a while.

After you start buying real calls and puts, you can start to learn about the more complex strategies.

It takes time, and based on what I read in the penny stock thread, many lessons are learned through pain. They don't need to be learned through pain. And a beginner doesn't need to start selling uncovered calls and puts until he fully understands the risk, and how to manage this risk down to a tolerance point that he/she is comfortable with.

I've never had a call or put exercised against me. I've had to buy back calls and puts I sold at a greater price than I sold them for to close out this possibility many times. I have exercised many calls and puts against other sellers though.

I do this on SLV and GLD a lot. I own both, and have an understanding of how the spot and futures prices move. I understand the miners, and how much it costs them to get an ounce out of the ground, and what their profit/loss point per ounce is. I fully understand the paper ETF's, and the dangers of many thinking that these will always track the actual commodity prices. I've been buying silver since it was $4 per oz.

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with fake money for a while.

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I don't own any bitcoins......






:rimshot:

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Where are they traded just out of curiosity?

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I've heard they are on the internet somewhere.

I'm not exactly sure but I heard Al Gore is involved somehow.

frick me, 3% down in pre-market :bang head: