|
PureBytes Links
Trading Reference Links
|
They are called LEAPS. Steve Poser
Mehdi Zafar wrote:
>
> i believe there are long-term options avaialable for blue-chip names...
> options that expire in 1 to 2 years...? i am not sure what they are called...
> ...you might want to look into them
> as well/instead
>
> RAY RAFFURTY wrote:
>
> > Hi Jawad,
> >
> > One of the best things about options is their flexibility, one of
> > the worst things is their flexibility {;-)
> >
> > First you must understand the types of options. A call give the
> > buyer the right (but not the obligation) to buy 100 shares of stock at a
> > specified price, the strike price, for a specified time, the expiration
> > date. A put give the buyer the right to sell 100 shares of stock at a
> > specified price for a specified time.
> >
> > You can be either a buyer of the option or a seller. You can also
> > chose from puts or calls with many strike prices and several expiration
> > dates. Some basic examples are:
> >
> > If you believe IBM is going up you could "Buy to open" a call, you would pay
> > the premium. If IBM moves up in a short time the call will become more
> > valuable. The risk of loss is fixed to the amount you pay for the option,
> > the potential is unlimited.
> >
> > OR you could "Sell to open" a put and collect the premium. If IBM goes up
> > the put becomes less valuable, but you as the seller keep the premium. The
> > amount you make is limited to the amount you collect at the sale but the
> > risk is UNLIMITED, since if IBM goes down you would be responsible for the
> > difference between the strike price and the lower stock price.
> >
> > If you believe IBM is going down you could "Buy to open" a put, you would
> > pay the premium. If IBM moves down in a short time the put will become more
> > valuable. The risk of loss is fixed to the amount you pay for the option,
> > the potential is unlimited.
> >
> > OR you could "Sell to open" a call and collect the premium. If IBM goes
> > down the call becomes less valuable, but you as the seller keep the premium.
> > The amount you make is limited to the amount you collect at the sale but the
> > risk is UNLIMITED, since if IBM goes up you would be responsible for the
> > difference between the strike price and the higher stock price.
> >
> > It is very important that you thoroughly understand options before
> > you attempt to trade them. There are many books about them. I recommend
> > you start with one of the ones by Lawrence MacMillan.
> >
> > Good luck
> > and good trading,
> > Ray
> > Raffurty
> >
> > -----Original Message-----
> > From: jawad <jawad777@xxxxxxxxx>
> > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > Date: Sunday, February 14, 1999 3:17 PM
> > Subject: Options: How to place orders?
> >
> > >I would like to know what each of these choices in placing an order
> > >for a put or call means.
> > >
> > >Buy open-
> > >Sell open-
> > >Buy close-
> > >Sell close-
> > >
> > >Thanks,
> > >Jawad
> > >
> > >P.S. I found out what my trading system was called. It was bottom
> > >fishing. It is not that easy to make money i have also learned. I am
> > >down to about 16,000. Mostly because of SMTK in which i lost all of
> > >my money. Well, i guess that's just the way the ball bounces.
> > >
|