newbie question

Discussion in 'Options' started by justfortrends, Aug 17, 2010.

  1. Hello,
    I have a newbie options question which I think I know the answer to but just want to 100% clear about, being it is options we are talking about.

    If I buy an options contract and then sell it, am I on the hook if whoever I sold the option decides to exercise it?
    I am thinking no, since I did not write the option merely bought it. The person who wrote the option is the one on the hook.

    thanks in advance.
  2. !!!!!!!!!!!!!!! NO !!!!!!!!!!!!!!

    !!!!!!!!!!!!!!! NO !!!!!!!!!!!!!!

    !!!!!!!!!!!!!!! NO !!!!!!!!!!!!!!

    !!!!!!!!!!!!!!! NO !!!!!!!!!!!!!!
  3. Exch-traded options are fungible. If you bought some option contracts and then sold your position out, you're flat, have no exposure and are not on the hook to anyone. This doesn't hold for OTC option contracts, such as FX options, for example.
  4. Speaking of FX options Martinghoul, do you know if there are any avenues in which a retail trader can get access to FX options which are exchange traded? Not the usual BS ones that are pinned to a currency index instituted by ISE or Nasdaq/PHLX where the liquidity is practically nonexistent?
  5. MTE


    Options on currency futures.
  6. xyannix


    See Options Weekly, there are many articles there geared towards new option traders. You may get some money making trade ideas too!

    Click here for Options Weekly
  7. Good call, though I guess for exotic currency pairs (i.e. EUR/HKD or USD/SGD) or even crosses such as EUR/GBP that's not an option.

    Nonetheless thanks for the tip :)
  8. Liquidity in these ccy futures options ranges from non-existent to utter sh1te, even for the usual suspects like EURUSD (open interest is smth ridiculously piddly like 100 lots for the options on the front contract).
  9. Thanks guys.
  10. I made my first option trade. PCLN Aug 300 put bought at 1.80 sold at 4.20. I know it was gutsy of of me to go with the Aug, but I was so sure that it was going to go down either today or tomorrow, i was prepared to give up $180 if I turned out to be wrong.:D
    #10     Aug 18, 2010