Options with little capital

Discussion in 'Options' started by brown, Dec 30, 2007.

  1. brown


    I am back and forth on buying stocks or options for meli. The problem I am having is I only have a few hundred dollars to invest each month, and meli is currently trading at $80 a share. If I were to buy them I could only get about 3 or 4 shares. However If I decide to go options I could just pay the premium for 100 and come out on top if they go up, which I believe they will. Any advice on what you would do with this situation. Thanks!
  2. OptionGuru


    I would start with buying one 1-strike OTM call contract that expires within a month.

  3. Brown, I agree that is very tempting to use options for the perceive leverage that they offer however be aware that options don't really provide leverage but instead they provide optionality. So if you have a clear understanding of optionality and how it works go ahead and trade the long gamma out of those options :)

    If you don't then research gamma trading before starting doing trades.