Thanh; options can be costly to learn; I try to caution every one,
and it's no way to really play them like I do if your not set up
I have pre oders in on the computer at prices I think wont go,
if when I make a judgement it like click click..change the price,
or do a market and poff..I can trade faster than you can pick up
the phone and dial the number, and sometimes it takes that too.
If you look at them again, and see a dog you know just wont make
it..look at "leaps" they are not so hectic..look at calls to..
but ones way out. Only bet pocktet change on options, don't ever
make it you investment style..it's out and out gambling and there
are many "sharks" doing it with much much experance, and if they
are at all honest they will tell you they lost their butt early
on, and had to play catch up for a long time to get even.
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Every bet has to be thought through..to me it takes the place of
my going to the Race Track..which I use to do.
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There are some bets with options that can be called investing..
here they are..You like a stock, and say if she would come to
down to $ 20 I would buy her..maybe she is 23 at the time,
so you sell ( write puts at $22.50 ) and get 2.50 for them..that way
if she gets "put" to you at $22.50 you really got her for $20 as
you can put the 2.50 you got for the puts towards her price.
Also this way if she don't come down..you made money off her any
way..the rub is to write the puts you have to have enough cash
to back you up to pick her up..and that cash is tied up till the
option expires..well not compleatly as that cash will be making
interest at the monet market rate. Thing is you can't use it to
buy something else with unless you buy the put back.
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Writing calls can be ok if you want a stock to pay you a dividend,
and you have set target price you would sell her at any way.
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Buying calls if your new only buy calls on a stock you want to
own and know you will have the money come such and such, but are
afarid she will be to high by then..with that in mind you buy
the calls..to get the stock at that price even if it goes higher
they have to give it to you. Most often I find that a waste of
time..I buy calls to gamble, let there be no doubt about it.
However I have sold puts ( wrote them to support a positiong )
last year I was averaging down on AMD till I was going blind,
I wrote puts to help me average down..I bought first at 14..
she droped I said heck..I sold 12.50 puts and waited..got me
500 shares at 12.50 but used the money to make it $ 11, so I was
now averaged 1000 shares at 12.50..she droped again man I was
beside mu self...I said well damm it I double up agian..( I HAD
A LOT OF FAITH IN AMD AT THOES PRICES SHE HAD AN $18 BOOK VALUE ,
AND I KNEW THE COMPANY SOME )..any way I sold 10 puts..and got
anther $3 for them...I said to my self well if she come to 10,
and I get them..that'l really be $7..and I'l be in at $ 9.75 for
2000 shares..more than I wanted but I was like a bull dog about
it...she came to 10.25..during that fall..I did'n get the extra
1000..but kept the $3 grand, and applying it that brought me into
her for $ 9.50 I doubt anyone bought her that cheap in years.
My broker thought I was nuts, I don't use him any more either.
Jim
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