Hello, I have an options question please. I am very confused and have started learning options. If I was to sell an option call ( 30 day option call ) at a strike price of $20 for $7.00 (I understand the 7.00 will diminish due to decay). \and lets say that $7.00 at the last week of expiration is now worth $3.00. -Will the breakeven for the person who bought the call still be $27? If not what would it be. > because the price went down due to decay. -To me it seems If I was to sell a vertical the decay would put me more in favour increasing my odds, because if the price went against me the breakeven has now reduced. Am I right? you help would be warmly welcomed. thanks..
You should only look at your side of the trade as you have no idea what the other side did to hedge or not. For your trade, you are making the assumption the stock will not move. I'd suggest you don't trade your first options until you fully understand the asset class. This is a good place to start. https://www.lightspeed.com/trading-education-center/ http://www.cboe.com/education/education-main
I never said I was trading, I am still learning. I already have my own material and don't need your promotion. You didn't even attempt to answer my question, Sad!
that break even point on expiration day is always the same unless you are talking about day-to-day break even point for starters, use some options software/ platform.. so you can learn & visualize how p/l curve changes from the beginning of the trade until the expiration day there is always a trade-off.. as you reduced some risk, you also reduce some of the reward welcome to options :]
Morse gave you links to two good sources of information, neither of which were self-promotion. If you have your own materials and you are still here posting simpleton questions, you should review what he's provided to you. And don't come here again acting like a stupid ass.
Hi, thanks for your input. Sure I have my own materials butI needed advise from professional traders, because I'm new and this is entirely complex for me. Indeed simpleton questions, but not for me. I'm so sorry I'm not at your level. I hope when I have knowledge I can clearly help others as well, instead of calling them a stupid ass and giving them promotional rubbish.
You are being called a stupid ass because of the way you responded to Robert Morse, not because you are asking basic questions. He gave you some good links to look at. Why would anyone want to help someone who comes here with your horrible attitude?
Hi, thanks for your input. We must have different cultures. I did not not mean to offend you. Perhaps this link will help you https://www.lightspeed.com/trading-education-center/
No offense to you, I always have a tremendous respect for Mr. Morse. In my years of posting here, he was always a gentleman and very helpful so if you want to learn something, instead of badmouthing him, a little humility will do you more good. In any case, I suggest you read the book by Larry McMillan, Options as a Strategic Investment. That was the book that clear up a lot of questions I had on options and got me on my way to be a full time options trader. Good luck.
What is wrong with the link: https://www.lightspeed.com/trading-education-center/naked-call/ https://www.lightspeed.com/trading-education-center/bear-call-spread/ These may clear up some of your questions? If not there a a lot of other good info there for a beginner and free demo.