Options-Tricky beasts they are. (Honestly, I think you have a better chance making money on penny stocks (under 10cents)).. I think brokers make the most money..
As for my PUT today, last price of my QQQ OCT $34 PUT was $1.65 ($10 profit so far if I sold). Anyways, we will see...
The post above mentioned an extra tid-bit I learned with options - you want to buy options on stocks that are VERY volatile. A great stock example for this would be "China Fund" (CHN) lately. All over the map. Real nail biter I tell you. A friend of mine over a "coiffee" told me about CHN it.. got in at $24 - saw it hit over $28 then fell right back below $24 - to lower mid 23's then back up again to just over $28 (I sold my itty bitty 200 shares at $28) and down again - up today to $26.
I am not saying go out and start playing (PAPER TRADE!); but if you are, get something that does move since TIME is against you. One year I had IMO (imperial) - it fell just below my call and literally sat there - going up or down 5-10cents every day - my call was like $0.05 (that is the most common price when way out of the money - virtually worthless) and the stock never recovered in time.. of course after expiry it.. it.. but thats another story
But what about TF.... What was your reasoning for looking at JPM puts? I should be in bed - aka the volumes have been cleared at Yahoo! - but the "open interest" is short of 100K for all. Not much action really. Not necessarily a bad bet (since I am no expert), but just wondering why you chose them.
Two more points: - When you are out of the money - they expire worthless and they are removed from your account. So my total cost (mentioned previous post) is IT. No "selling" cost required. - When you are in the money - a number of things can happen. I have always sold before expiry so I cannot tell you of any experiences here.
The book on Options I did get is from Grab & Maul - the author has traded options for "several years" (why did I buy this book?????). Anyahoo, there is a lot to learn - and I could be posting excerpts - but I think it would be best to get a book at the library to start with.
- He suggested, for example, instead of selling the option near expiry, convert it to the actual stock and then sell the stock - there appears to be a discount in the option when close to expiry that you lose money on the value; but you pay in converting to a stock and then selling the stock - so is it worth the extra work?
- Alternatively, as a strategy.. "I own QQQ, but it has stalled and may not move much higher - but I am not sure; I made money already.. what do I do Delilah?" She comforts and in the background oddly she throws on a diddy by Aerosmith - Love In An Elevator...going down... "You could SELL your QQQs and they buy calls - if the stock continues up you make money; if it goes down, you lose just the price of the option - a little extra play.."
Again I am no expert in options. Played them; had some fun but mostly lost money. I have always wanted to venture back - and I think if I stick with indexes, I might be better off.
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