option trades

[Davc]

Miracles happen. I have a client that made money last year with currency trades.

[JohnH]

What about this year?

What's the likelihood that he's already lost it all this year, plus some?

[Joe Btfsplk]

It seems obvious to me that the Options Market would not exist if there were not entities other than brokerage houses making money off of them. And if large hedge funds and pension funds can make money with them why can't individuals. Of the many strategies for using puts and calls I understand only two so these are the only ones that are safe for me.

Buying calls instead of the underlying securities allows me to control more stock with the same money. I can either buy a huge number of calls of one stock and then sell the call if the stock appreciates or I can buy calls on different stocks and actually buy the one that does the best, and immediately sell it at a profit or keep it for further appreciation, The worst thing that can happen with a call is that you let it expire unused and you are out chump change.

There is also a strategy for rising and sideways markets known as the covered call. You buy the security and you sell a put at a strike price say 20% higher than current market value. If the stock tanks, the few hundred dollars you got for the put will reduce your loss. If the stock appreciates, but less than or equal to 20% you simply sell it and you have your appreciation plus the money from the put. If the stock appreciates more than 20% the buyer of the put will exercise the option, and your gain will be limited to 20%. That's a fair price to pay for the insurance you had against it tanking.

As for Options Express, everyone I know who does business with them is happy there. That does not include any of my clients so I cannot comment on their statements. I understand that you can buy just about any investment from any of the World's major exchanges. They are certainly not limited to Options.

Option trading enables both the buyer and seller to lose money. If you buy a call option at a certain strike price and the stock goes up a little, the seller wil probably have to buy it back at near the sales price and the buyer will make back approximately the premium he paid for it--but when you add the broker commissions both the buyer and seller are likely to lose.

In a raging bull market, you can make a lot of money selling puts short if the premiums are high. I made $ 60,000 one year selling QQQ puts short--but was too dumb to quit while I was ahead when the market headed south.

In a bear market you could short deep in the money calls, but it would be just as logical to short the stock since you have to do something if the call expires in the money which results in a lot of commissions you could avoid by just shorting the stock and have no expiration to worry about.

[Possi]

Joe Btfsplk

Apparently he was buying puts and calls.
The description would be something like July $25 Widget Co Calls or July $ 25 Widget Co Puts.
If he buys them then the cost would be what he paid. If he sells a "long" position the price received would be the sales value --or it could be zero if the option expired worthless; e.g. a $ 25 call expires when the stock is only worth $ 24.

If he sells an option short and it expires worthless, then the cost is zero and the sale is the amount he received when he sold it.

He wrote "All options trades. No short trades. No equity trades."
Is all this long term? I thought all were SHORT term.