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Posted on 5/18/13 at 7:27 am to LSURussian
Next post.
This post was edited on 5/18/13 at 7:40 am
Posted on 5/18/13 at 7:38 am to ThaBigFella
On whether PM can drop to $50...is it likely? Probably not. But don't say it could never happen. Imagine if you'd sold Chase puts before the London whale story came out. Or sold BP puts before the oil spill.
A black swan type event can wipe a trader that sells options out. Buying options limits your risk to the cost of the purchase. There is essentially no limit to the losses one could have selling options.
The only time I'm a fan of options is buying them as insurance if one is trying to hold a stock to make it to long term capital gains point versus short term.
A black swan type event can wipe a trader that sells options out. Buying options limits your risk to the cost of the purchase. There is essentially no limit to the losses one could have selling options.
The only time I'm a fan of options is buying them as insurance if one is trying to hold a stock to make it to long term capital gains point versus short term.
Posted on 5/18/13 at 8:19 am to ThaBigFella
i've sold cash secured puts for several years.
Most of the time, they expire and I collect the premium.
Sometimes I am "put" the stock at a basis of the strike minus the premium. This is OK for most high quality issues.
A few times, I have paid dearly for taking a quick premium on a crappy stock. Avoid this if you can.
Bottom line: For stocks of good businesses that you would write a LIMIT order for at the STRIKE, WRITING (SELLING) CASH SECURED PUTS can make sense.
Most of the time, they expire and I collect the premium.
Sometimes I am "put" the stock at a basis of the strike minus the premium. This is OK for most high quality issues.
A few times, I have paid dearly for taking a quick premium on a crappy stock. Avoid this if you can.
Bottom line: For stocks of good businesses that you would write a LIMIT order for at the STRIKE, WRITING (SELLING) CASH SECURED PUTS can make sense.
This post was edited on 5/18/13 at 8:26 am
Posted on 5/18/13 at 10:00 am to OnTheBrink
quote:quote:
A put is an option to sell, not an option to buy.
I'm I missing something?
A put is an option to sell, not to buy.
It obligates the put seller to buy at strike price if the option is exercised.
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