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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sal D who wrote (1328)	3/2/1998 9:07:00 PM
From: Sergio H	Read Replies (1) \| Respond to of 29382

Joe, it looks like the higher low on seven successive trading sessions and again good vol on TRCD. Your question regarding buying and selling of the options: <Lets suppose I decide to buy 50 contracts for a 25.00 call each one costing 1.00 So the 50 contracts cost me 5,000.00 and give me the option to buy 5,000 shares at 25.00 before expiration. The stock gos to 30.00 and I exersize my option I buy the 5,000 shares for 25.00 = 125,000.00 I sell them for 30.00 = 150,000.00 25,000.00 - 5,000.00(premium) = 20,000.00 (profit)> If the stock goes to 30, then your calls are worth at least $5.00. So your profit = $400 x 50= $20,000.00 Same result as you came up with, but you don't have to convert the calls to shares to close your position. You therefore do not need to come up with the cash to buy the 5,000 shares. You will however need to have sufficient cash in your account to buy the options, no margin is allowed, and you have to be pre-approved for option trading. Nice program that you have for option trading, by the way. Sergio