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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: pekos who wrote (5187)	12/30/2011 8:06:58 PM
From: shlurker	Respond to of 5205

If you think AAPL goes down, you should have bought a put, not a call. Buying a Call -> betting stock goes up Buying a put -> betting stock goes down ok - i get that at last, thanks - It's true no matter what option strike price i select for the CALL option! In fact, here's a summary of it all IMHO: CALL formulas: Let's say at time t=o: I buy an AAPL CALL at STRIKEo option at the price BIDo I buy 100 shares of AAPL stock outright at the t=o market price AAPLo Then at time t: PROFIT(t) = 100(AAPL(t) - BIDo - STRIKEo) { if I 'excercise' the contract at time t} or PROFIT(t) = 100(BID(t) - ASKo) { if I 'sell' the contract at time t} PROFIT(t) = 100(AAPL(t) - AAPLo) { just sell the stock at time t - no options} ----- And similar formulas for the PUT options, where i'd invest had I hoped that AAPL goes down.