Welcome Ray,
Thanks for sharing your situation with the forum. We are all here to learn from each other. I hope you read Caroline's reply about the 500 shares vs. 500 covered calls. 100 shares of stock = 1 Call contract, 500 shares of stock = 5 Call contracts that you could sell.
It is important that you start to learn about CCing and the relationship of PUTs and CALLs before you dive in with your serious money. Please buy Larry McMillan's book, Options as a Strategic Investment and keep that on your shelf as a reference and study guide. It will be beneficial for you in order to avoid exactly the situation you stated. That is, you picked up BTGC (or any stock for that matter) and it continued to drop, drop, and drop until you had a serious paper loss. It's a drag, but you can get back most if not all of your money if you are willing to apply CCing techniques.
Hindsight is 20/20. That is, it is much easier to stay out of trouble if you have a tool shed of trading tools. CCing is a big one! When you go fishing in the ocean you don't bring along your fly fishing rod, right? You need to bring the right gauge fishing rod, fishing line and bait. Well, investing in stocks is no different. You need to:
1. Read the signs on the charts like volume, RSI and BB. You can read of the post on this forum for plenty of websites that go over that.
2. Sell CCs at the right time, right strike price, and right month.
3. Have some idea of earnings date, news items, and human nature. How people react to things in the markets is very important. Why? The MMs are masters in deception and they will whip you around if you are sleeping.
The more awareness you have for the three things above, the more confidence you will experience and the more fun you will have.
In closing, don't take my word that BTGC has bottomed. I'm confortable with my analysis. You need to learn the TA skills in order to based your buy/sell decisions on.
I can "feed you the fish" or I can help "teach you how to fish." Clearly, if you wish to learn you will have better results and be able to take all of the credit. |
