Ced's High Risk Options

[ced70]

Does everyone understand what happens this Friday after close for any Feb07 options you are holding? You may want to check with your broker. Etrade will create a margin call if you are in the money and hold your options. Also, on most stocks you are not considered in-the-money unless it is at least 5 cents above (CALL) or below (PUT) the strike price. If you are in a Call option the shares have to be bought on Monday. If you are in a Put options the shares have to be sold to you on Monday. If you are out-of-the-money this Friday you lose everything.


So the deal is if there are a whole lot more Puts in-the-money in open interest after Friday's close there will be a big sell off to cover the interest.

If there are a whole lot more Calls in-the-money in open interest after Friday's close there will be a big buying frenzy to cover the interest.

Just something to keep in mind.

One thing that options are good for is you can see if the majority is shorting or going long on a stock. You can see the positions change before your eyes and it is a good way to see where the majority believe the stock is going to move over time.