Options for noobs help part 1 of 984

Discussion in 'Options' started by KINGOFSHORTS, Mar 12, 2009.

  1. Okay.

    1 contract = 100 shares

    To price option. that is selling for .63 (63 cents per share)

    Multiply by number of shares.

    1 contract = 100 x .63 cents = 63 dollars.

    10 contracts = 1000 x .63 cents = 630 dollars to insure 1000 shares against losses - deductible if any.

    On your brokerage website.

    Buy to open means you are buying the option contract
    Sell to close means you are selling the option contract

    Options can be used as insurance, just like Auto insurance and options expire and have to be bought again just like Auto insurance.

    Options have time value just like Auto insurance, Your auto insurance is worth less as the days get closer to your Auto insurance expiring.

    Just like Auto insurance you can determine the amount of deductible you are willing to pay. More deductible the insurance is cheaper, no deductible the insurance (Put option) is more expensive.

    Teenagers Pay higher insurance premiums.

    Riskier stocks pay higher insurance premiums just like Teenagers when they first learn to drive.

    buying a put option is better than a limit order, A good till cancelled limit order will not insure against the stock going to 0 the next day.

    Bears Sterns is a good example. If you had bought BSC on thursday and the (Put option) insurance, and heard the bad news sunday you are are protected.
  2. timbo


    You might want to post this at youporn; especially post 984. They love to read over there.
  3. Well part 820 covers BBBJ very important stuff.
  4. spindr0


    What kind of options are available at youporn? Any of that naked strangle/straddle stuff ??

    (vacant stare)