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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (1845)	10/27/1998 1:37:00 PM
From: Investor2	Read Replies (1) \| Respond to of 15132

Re: "If you are assigned first you cannot buy back the call." What does that mean? Thanks, I2

To: MrGreenJeans who wrote (1845)	10/27/1998 1:48:00 PM
From: Trebor	Read Replies (1) \| Respond to of 15132

>They are generally priced at $2.5, $5, or $10< Okay, I should have said LOWER PRICED stocks tend to have options priced at $2.50 increments. I'm not sure of the cutoff or criteria but it seems stocks under $30 will have strikes at $2.50 increments while those over that tend to go in $5 steps. However, something like a 3 for 2 stock split will create a whole array of options priced in $2.50 increments for higher priced stocks. Cisco is a recent example. >Absolutely not! They stop trading the third Friday of the month but they expire the Saturday after the 3rd Friday of the month.< Correct, but aren't we splitting hairs here? The third Friday is the deadline for any trading on that month's options; that's why the markets frequently do spooky things on these "witching" dates. >There have been instances where the stock has been called away even when it did not exceed the strike price by expiration.< Okay, and investors should be aware of this possibility. But I'll stick to my guns that this is the rare exception and not the rule. And if an investor sells a call at a strike price he's content with, it's not the end of the world to have the stock called away. He's still made the profit he was content with at the time he sold the call. >Opportunity cost is a real risk.< So is buy and hold. So is getting out of bed in the morning for that matter. >My advice to those interested in options is to start by reading "Options as a Strategic Investment" by McMillian. It is the best book out there.< On that we can agree. I would also suggest that anyone interested in any aspect of options trading do several months of play trades before attempting the real thing.