OPTIONS101

[downtimepg]

ideas on option plays are welcome, by anyone.

leaning towards the simple puts and calls on:

trending stocks

stocks going into earnings

pending BK stocks

any pending catalyst (good or bad)

world event driven stocks

or any stock that has the potential to move substantially in either direction

[downtimepg]

anyone have any current option thoughts?

[SagDec15]

And then Monday bought more at .45. So I had some from .70 and .45. Yesterday I sold the .70s at .85. That was fun. I also bought some WCOM Sep02 10s, TERN June02 7.50s, and PFE Sep02 45s. The market has to bounce up here! If it does, the calls should be worth more ?? I don't know much about options, but even if I lose all the money in the options I bought, it's still less than I've done even this month with the stocks.

I see this is a new board, but where are the options traders?

I was thinking that options would help me raise some capital, or at least with the Sep & Oct calls, I had a few months to figure it out. But then I got a nice little surprise on Friday. I've been trying to wire funds since Tuesday to get me over PDT status. I finally managed to get it there on Friday... I get on my account and see it's there, but I'm still with PDT status. Then I realized that OPTIONS are deducted and not included in that equation! So my options put me below the 25K minimum, oh so slightly. At the opening bell I was trying to figure out what to do, then at 09:31:13 my VZ calls sold at .85, my account cost changed, and my "Day Trades Left: 1" changed to "Day Trades: Unlimited". WOW! And the VZ calls fell back to .65X.70 shortly after.

[SagDec15]

I bought my first Call today (well, Friday) just to see how it goes. Bought VZ Oct02 50s.

Where's all the options traders?

[StockTrader]

Long Call
Purchasing calls has remained the most popular strategy with investors since listed options were first introduced. Before moving into more complex bullish and bearish strategies, an investor should thoroughly understand the fundamentals about buying and holding call options.

Market Opinion
Bullish to very bullish

When to use
Bullish Speculation
This strategy appeals to an investor who is generally more interested in the dollar amount of his initial investment and the leveraged financial reward that long calls can offer. The primary motivation of this investor is to realize financial reward from an increase in price of the underlying security. Experience and precision are key to selecting the right option (expiration and/or
strike price) for the most profitable result. In general, the more out-of-the-money the call is the more bullish the strategy, as bigger increases in the underlying stock price are required for the option to reach the break-even point.

As Stock Substitute
An investor who buys a call instead of purchasing the underlying stock considers the lower dollar cost of purchasing a call contract versus an equivalent amount of stock as a form of insurance. The uncommitted capital is "insured" against a decline in the price of the call option's underlying stock, and can be invested elsewhere. This investor is generally more interested in the number of shares of stock underlying the call contracts purchased, than in the specific amount of the initial investment - one call option contract for each 100 shares he wants to own. While holding the call option, the investor retains the right to purchase an equivalent number of underlying shares at any time at the predetermined strike price until the contract expires.

Note: Equity option holders do not enjoy the rights due stockholders – e.g., voting rights, regular cash or special dividends, etc. A call holder must exercise the option and take ownership of the underlying shares to be eligible for these rights.

Benefit
A long call option offers a leveraged alternative to a position in the stock. As the contract becomes more profitable, increasing leverage can result in large percentage profits because purchasing calls generally requires lower up-front capital commitment than with an outright purchase of the underlying stock. Long call contracts offer the investor a pre-determined risk

Risk VS Reward
Maximum Profit: Unlimited

Maximum Loss: Limited
Net Premium Paid

Upside Profit at Expiration: Stock Price - Strike Price - Premium Paid
Assuming Stock Price above BEP

Your maximum profit depends only on the potential price increase of the underlying security; in theory it is unlimited. At expiration an in-the-money call will generally be worth its intrinsic value. Though the potential loss is predetermined and limited in dollar amount, it can be as much as 100% of the premium initially paid for the call. Whatever your motivation for purchasing the call, weigh the potential reward against the potential loss of the entire premium paid.

Break Even Point(BEP)
BEP: Strike Price + Premium Paid

Before expiration, however, if the contract's market price has sufficient time value
remaining, the BEP can occur at a lower stock price.

Volatility
If Volatility Increases: Positive Effect
If Volatility Decreases: Negative Effect

Any effect of volatility on the option's total premium is on the time value portion

Time Decay
Passage of Time: Negative Effect

The time value portion of an option's premium, which the option holder has "purchased" by paying for the option, generally decreases, or decays, with the passage of time. This decrease accelerates as the option contract approaches expiration

Alternative Before Expiration
At any given time before expiration, a call option holder can sell the call in the listed options marketplace to close out the position. This can be done to either realize a profitable gain in the option's premium, or to cut a loss.

Alternative At Expiration
At expiration, most investors holding an in-the-money call option will elect to sell the option in the marketplace if it has value, before the end of trading on the option's last trading day. An alternative is to exercise the call, resulting in the purchase of an equivalent number of underlying shares at the strike price

[StockTrader]

Options Expiration calendar
http://www.888options.com/desk/xcal2002_2003.pdf