options are too risky, goog 520 april call was very lucrative, if you
were a gambler before the earning ,you could be a millionnaire in 1
day.
is there any stock that will surprise us like this baby ?

neveral...@yahoo.com a écrit :

VMW maybe??

Guys can someone explain this to me:

I have TD Ameritrade...

So lets say I purchased 1000 April calls for .10 per contract,  thats
100$  , and on top of that I would get charged 9.99$ per contract from
TD ameritrade, for a total of 9990 ? So Together I would pay 10090 for
everything ? Then I would have to resell that again @ 17.53?  So my
profit would have been 176877.77$  ?? Correct me if I'm wrong.

To buy 1000 contracts here is the cost
$0.10(cost of contract)x1000(number of contracts)x100(number of shares
each contract controls)=$10000

profit= $17.53x1000x100=$1,753,000 nice $:)$

Not 1000 contracts for $100 dollars as you stated, 1000 contracts for
$10,000.
After today these contracts are worthless cause they expire,
To trade options you need to open a margin account.
Options are very risky and you should not use money that you cannot
afford to loose, same with stocks.
Seen many posts on here where students used there college money to buy
stocks(bear sterns) and loss their ass. If you are buying something
with a good chance of going down alot(high risk) it is always good to
buy a put(hedge) in case the stock drops big time then you can always
sell your stock at the strike price of the contract on the date it
expires. One can hold both a call and a put on  a stock at the same
time, also known as a straggle when the strike price and month expiry
is the same. A different strategy is a strangle ie current stock price
is $20 and one buys one may 17.5 put and one may 22.5 call(good
strategy when you expect stock to swing big one way or another)

The Strike Price (or Exercise Price) is price the underlying security
can be bought or sold for as detailed in the option contract. You
identify options by the month they expire, whether they are a put or
call option, and the strike price.

Call Option: An agreement that gives an investor the right (but not
the obligation) to buy a stock, bond, commodity, or other instrument
at a specified price within a specific time period. (Investopedia.com)

Put Option: An option contract giving the owner the right, but not the
obligation, to sell a specified amount of an underlying security at a
specified price within a specified time. This is the opposite of a
call option, which gives the holder the right to buy shares.
(Investopedia.com)

Hope this helps you understand options a bit better :)

jumper already explained you the basics, only thing i want to add is
that ameritrade charges $9.99 plus $0.75 per contract (and not 9.99
for each contract) .. (most brokers charge in similar fashion .. rates
might be different tho) so for 1000 contracts u are looking at around
$0.75 x 1000 + 9.99 = $759.99 commission and not 9990 :)

do some homework before u start on options trading, u can lose entire
amount almost immediately...

What about the GOOG contracts ? Do I add those too  ( those .10 ) ?

I will do more HW on options trading, I just wanted to get quick -
basic idea of how this works, I'm still learning how to trade stocks
properly so I wont touch this for a while. Also..Why is a margin
account necessary ??? I have Stock account, and Options BP with
ameritrade, with funds available for both...I wouldn't really want to
risk borrowing money on margin to  to gamble....

So basically , for 1000 contracts, I have to pay about 759.99$ in
commission just from ameritrade, now what about all the other things I
have to pay for? The google contracts were .10 cents right? So 1000 of
them would be 100$, and 1 contract - 100 shares, so Now I have a
multiplier.... 100(shares)x 1000(contracts)x17.XX(new price of each
contract)   =  my profit ?

P.S. I'm not planing on trading options anytime soon I just want to
understand the idea better / clearer before I move on.

Thank you.  So if the situation was only 100 contracts (as in the
thread's original post example of 100 contracts turning into $17.5k),
the total commission cost would've been $84.99.  That sounds more
reasonable.

And the odds seem a little better than Vegas, considering the payout
against the risk... but probably not much if we're being honest.

How do I find out the price of a contract for a given company ?

Your broker will know them. If you use an online account there should
be a section. Check the quote for a company and see if there is an
option section

You should be able to query your account for real time quotes

for learning / browsing, you can see  ....

http://finance.yahoo.com/q/op?s=GOOG

remember the price is for one share. so first multiply the price with
100 to arrive at price for one contract (each contract is 100 shares)

so once you arrive at price for a contract, then decide how many
contracts you want to buy ... and then calculate what will be the
commission etc ...

so for example ... GOOGLE 520 April CALL on Thurday was selling for 15
cents (i.e. $15 per contract) ..on Friday it became $25 (i.e. $2500
per contract),

so your $15 would have become $2500 less commission i.e. (9.99 + .
75 ) ...

discussion on this thread has been around this.... this is the bestest
case scenario... i havent seen it happening in past and i will be
really surprised if it happens again ...

on the other hand, (it would be unfair if i dont tell u this), had you
purchased GOOG 530 PUTS on thursday for $7700 per contract, you would
be sitting on 5 dollars (read ZERO)...

so play options with the money that you can afford to lose (thats
probably why its almost always called "playing" options) ..

good luck, u might wanna play on dummy account first, then on LEAP
options, and then on near future ones...

don't try to make a living with speculative, naked option positions.
if you wanna trade options, learn about volatility. i got lucky, yes,
but i probably won't ever be on the right side of such a trade
again... therefore i won't be placing anymore bets.

best.

Options are excellent way to make money and easy way to lose money. I
lost of money just doing options. But I haven't given. Still doing.
Once you taste it you can't resist. I am fortunate to make money
today.
Taurean

neveral

Read  some books first before trading options. Get yourself
familiarized. Option profit potential is huge but your risk is limited
to your premium. It is better to trade options in a Roth IRA account,
so it can never be taxed at all. You can see the buy and sell spread
with their expiration on cboe.com, finance.yahoo.com, etc., your on-
line account should have that too. Also be careful on trading option
near the expiration date (3rd Fri of each month), time decay is very
steep on the last 30 days of expiration. Good luck :-)

Option trading can make a strong portfolio even stronger. I just would
not recommend it to someone new to the market. Spend a few years
trading stocks before you mess with margins and options. I am by no
means an expert, but I stayed away from them initially. If you take
excessive risk (easy to do with options+margin), you are essentially
gambling.

Why are call options considered so risky?  The most you can lose is
the price of the contracts + comissions, right?  You already know your
max loss, unlike actually buying the stocks.

I've had a bit of a look into options before, but have found some of
it a tad bit confusing... Can anybody recommend a good book which
explains options for newbies?

So my question.  Say the 520 call expired May instead of April.  The
520 strike hit.  Also say theortically that the gain is still
17,000%.  Could you sell right now and avoid the risk of the 520/share
dipping below 520.  Meaning, you hit the 520 strike so you sold.  Now
the share drops below 520.  Can you be assigned in anyway?  What if
you sell the call above 520/share, the price dips down then comes back
up to $520?  Can you be assigned?  I'm new to options.

Basically once it hits the strike can you sell and be in the clear?
This is all theoritical pretending that the 520 strike in April is
really May...so play with me here.

Well to most normal people having a 95+% of losing 100% of your
investment within a month or two is risky. Writing call options naked
is even more insane because you could get 15 bucks for a contract that
has the smallest chance of losing 15000% value. What I did was bought
an option for google 2 years in the future with a strike price of
$1100. I didn't really think the option would goto that much within
two years, but since I bought the option at 150 per contract and now
it is worth nearly 800 per contract I am going to settle my position.
The reason I did it so far in the future was that I (incorrectly)
assumed that this quarter wouldn't be so good for google, but I had
faith in their next one. Happily I was not optimistic enough.

One thing I do recommend everyone who owns stocks should do is sell
call options if you own the underlying stock. I recommend this for two
reasons. The first reason is that it is good to have an idea of where
you want to exit your position on a stock. If you bought 100 shares of
company XYZ for $100 a share you should know what your 1 month, 3
month and 12 month goals are. If the stock goes to $150 within a
month, would you sell it? If so write an option for $150 strike price
and make an extra 3 or 4 percent return. The second reason I recommend
doing this is that it forces you to stick to your original plan. All
to often people buy shares and ride them like a roller coaster without
having objective criteria on when to buy and sell.

That's just my 2 cents.

This is a good website it explains, what are options, why use options,
how options work, the type of options, and how to read an options
table.

http://www.investopedia.com/university/options/

Hope this helps you :)>

Right ! that is max that you can lose. Call and Puts are considered
equally risky as they have high volatility, also the likelyhood of you
losing entire amount in options is "higher" than while buying stock,
plus there is a time limit after which the option expires

That is incorrect. You know the max loss even while buying stocks. You
wont know max loss while "shorting" tho

thanks very much for the link, appears to be the sort of thing I was
after :)

This options thing is confusing. I know that calls = buy    put -=
sell , but how does that exactly work ? With this google thing ? What
did you have to actually do to make a profit ?  Buy 530 Calls  for
Google ?  and then how do you look in the profit ? you sell ?   Some
real life examples would really help me understand this better, Im
reading but its stilll confusing..

lets take simple example and lets talk only about CALL right now. lets
also forget commission for simplicity sake...

GOOGLE 530 (MAY08) CALL is selling for $26.00

So you need to spend $2600 to buy 1 contract (because 1 contract is
for 100 shares, you pay 100X26=2600).

Once you do that, you have got a right (but no obligation) to buy 100
shares of GOOGLE for $530 each BEFORE MAY17'2008.

--------------

here is how you can make profit

Lets say GOOG becomes 600 before MAY17, you can still buy for 530 (you
have the right, remember?) and sell for 600. So profit of $70 per
share, but wait, you have also paid $26 to buy that right... so profit
is 70 minus 26 i.e. $44 per share, i.e. $4400 per contract.

another way of profiting is :

you purchased Call for $26 and lets say next week it becomes $28, you
sell it, thus profiting $200 per contract... you dont need to hold
option till expiry date

----------------------
You will make losses if goog goes down/trades below 530 by MAY17 and
no one is willing to pay you $26
Your losses are limited to only $2600 tho.

.ppppsssss.... Slap in the face... Someone please slap me.... for so
much shorts on this stock, it was practically obvious to take a gamble