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Options
Options that you buy give you the right not the obligation to buy or sell a stock at a pre determined price. This is often called the strike price, and goes in 2 1/2 dollar strikes till 25.00, then in 5 dollar strikes till 200.00, at which they go to 10.00 strikes. If you sell an option you are obligated to perform, buy or sell at the preset strike. Options are sold to expire during each month. They expire always on the third Saturday of the month, but for our purposes we will say Friday because the market is not open on Saturday. When the stock goes up so do the Call options. When the stock goes down the Put options go up. I buy calls on stock that is in a pre-split or on support with upward pressure. You buy puts on stock that is going down like post split, stock up on resistance or bad news. Down ward pressure stock. Some say options are risky but I think they can limit your risk. You can only loose what you buy them for, but in stock on margin you can loose more then you started with. Options always expire worthless if you do not sell or excercise them first! So know what you do, and only do what you know. Trade on paper!!! |
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