Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: John Liu who wrote (133)	8/15/1998 11:40:00 AM
From: Tom K.	Respond to of 355

John, like any investment, the gains are offset by risk. Option trading has risks, however there are a range of option strategies that go from low risk to high. Selling (writing) is at the lower end of the risk spectrum.... but, there is clearly risk. Read as much as you can before trying. I'd recommend "Options as a Strategic Investment" by McMillian. It's like a textbook, but he explains the strategies with examples. Also, check out the CBOE web site. Options are a zero sum game meaning that for every winner there is a loser.... so, be prepared when you enter the arena. Learn all you can first, or the arena will teach you quickly. Good luck. Tom

To: John Liu who wrote (133)	1/12/1999 6:27:00 PM
From: Greg Higgins	Read Replies (1) \| Respond to of 355

John Liu writes: Does anyone know how does someone go about writing options and how much money do you usually need to do it? Also is it true that writing options are little or no risk of losing money? That depends. Writing options is not risk fee. Covered writing is generally considered a low risk strategy, but it shares the same risk as a direct stock purchase, that the stock price will go down. Naked Call writing, writing calls when you don't own the stock, is very risky on a stock by stock basis, but a portfolio of naked calls written on stocks believed to be going nowhere or down combined with a portfolio of naked puts on stocks believed to be going up probably has an excellent chance of giving outstanding performance. But beware, writing a naked call on a stock just because it seems to be a bit high is a great way to find out just how little capital you actually have.