Anita, stay out of options.
You have no business being in them, given the level of knowledge you demonstrated in your post. I say this as a statement of fact, not as an insult.
They are certainly tempting, from a leverage point of view. There is nothing more exhilarating than to score bigtime on a relatively modest investment; it's better than sex. I once made $14,000 in about 20 minutes, for example. But you have to be consistently right, on both direction and timing of the underlying stock, for you to make money in the long run. I wasn't, and you won't be either.
Plus, with options, you have to overcome bid/ask spreads which, if you do the math, you will find are ridiculous on a percentage basis. Go look at any options quote list for any stock and see. For example, if an option is quoted as 3/4 Bid, $1 ask --- that's a 25% spread you're paying. Said another way, your investment experiences an INSTANTANEOUS drop of 25% the minute you execute the transaction. Add your broker's transaction fee, which on a $1000 investment is probably going to be another 3 1/2 or 4%, and you're now talking a 30% instantaneous drop. Later, you've got to overcome a similar cut when you sell; therefore, all in, we're talking 60% hurdle to making your first dime. You get a more favorable playing field, and you'll lose less money, by going to a racetrack and betting your odometer.
Stick with picking good companies, and buying their shares, and wait for the stock price to catch up with their underlying value.
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