There is not a clear answer to that question. Your profits will depend on which put you wrote. For example, the strike price and expiration date will have a big impact on your results. I suggest you follow the recommendation to learn a lot more about what you are trading before you continue. You can get hurt badly with short options. Don't put yourself in the position of holding a stick of dynamite, lighting the fuse, then asking about possible results.
ok so if i put a put option not naked on a msft for example at 50$ it then goes up to 60 and keeps climbing. Can i just wait for the expiration date to expire and just lose the premium. or do have i buy the contracts and lose the premium and the difference?
i ve been reaidng about options. its just that it writing is somewhat complicated for me to understand. i just need someone to break it down in baby terms. lol
what im also confused about is see how appl is traidng above 100$. cant i just buy options right now for long at the strike price of 100$ and simply just sell it as soon as the order comes through?
Options are for pros or experimented traders, obviously you are not. Moreover, this is not a good period to learn how to trade options. CM
WHAT? This is why im tryin to learn. isnt this one of the many reasons why these forums are active? What better way to learn than to ask the pros themselves. And what the hell does my questions have anythin to do with you. Im tryin to learn. Im reading books about options but like any normal human being there are questions that i have about what it is im reading
cashclay: There is specific information and then there is general information about option trading. What typically occurs in a learning process is to try to grasp the "general" before understanding the "specific" information. You may find it worthwhile to form your theory for "general", then begin looking at some "specifics" to see how your general information holds up. Since you are on the steep end of the "learning" curve about options, it may be helpful to focus on a specific well defined idea, and work it thru, rather than generalizing too much. The reason I say this, is all traders are different (very different) and have many differing factors influencing their trading, and concepts of what is "acceptable" to them. No-one will know yours, but you. Responses received on this forum, have a very heavy bias from the perspective of the individual responding, (which may not be your perspective). Options provide a vast range of variations to exploit (or get exploited) by the market. It will take some time, and for some of us, a lot of effort, to gain sufficient understanding to form consistent and profitable trading from them. Regarding your question: I think you are considering "day trading" using options. If this is correct, slippage (bid/ask spread) may eat your lunch. If you do not adequately consider liquidity, you may loose more than your lunch. When using options for short term trades, I prefer to "buy" the option, rather than "sell" the option, so my RISK is defined at entry. You can then use calls or puts, depenging on your directional bias. Note the option strike's Delta to get an idea of how it should move with the price of the underlying during your short term holding period. (there are other factors as well -- DTE if too short can be too much excitement, volatility change during your holding interval can make you smile or cry, etc) Pardon the book: If helpful, good, if not discard.
the book is so confusing . it doesnt really answer the questions one might raise while reading the material. So talks in jargons that assume the reader is highly educated in the trading world not a beginner like myself. I would to like to know amongst other things is if an option (shorted) doesnt go my way can i hold out until the expiration date and just lose what i put in? Or do i lose what i put in plus the difference in the strike price? YOU SAY THAT i should buy the option and then use calls or puts to determine whether to buy or sell? How is that possible? Wouldnt this be absolute fool proof in losses. Wouldnt everyone make money then? I thought you woulld have to first place the bet on a short or long before purchasing the option and it wouldnt be able to change afterwards. just like trading in stocks.