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- Joined Aug 2010 | Status: Member | 1,320 Posts
Sounds very good 
Only problem is I don't understand. How can you make money if you buy and sell at the same time.
How much costs such an insurance.
Only problem is I don't understand. How can you make money if you buy and sell at the same time.How much costs such an insurance.
Sounds very good
- Joined Aug 2010 | Status: Member | 1,320 Posts
{quote} You should open a demo options trading account and play with it. Also read some basic definitions about options trading, read some basic introduction online.
I need that unlimited profit
- Joined Oct 2007 | Status: Member | 1,074 Posts
What is not clear to you exactly?
- Joined Aug 2010 | Status: Member | 1,320 Posts
{quote} A lot of money is generated when you SELL a call or a put every day. In 23 business days you've sold 23 of those and they will likely all mature and profit on those will add up to a total amount that's 10-20 times more than what you spent on buy a call and a put. And if you price moves to any of the bought call/put levels then in addition you make anything from that.
- Joined Aug 2010 | Status: Member | 1,320 Posts
{quote} Why would you even consider his proposal...it looks like the work of a kindergarten kid..
Interesting idea to trade options.. on weekends did some initial research.
Found here an interesting calculator for options - and calculated some examples - you can see here one calculation.
As I understand the riskiest (and most rewarding) is Writing (Sell) Puts/Calls.
In the example which I provided above, I see this:
As I understand - 1 deal looks like this:
I enter Write of PUT with 84$. If all goes wery bad then I lose additional 32$ (which must be on my account - I am required in the worst scenario buy 400 HUT shares for a price of 0.50$ even if 1 HUT cost is 0$). Total max loss is 116$ (+ transaction fees). Right?
But.. if I stay in the green area... like here:
Then I can exit at any time with profits? No matter that the expiry of my PUT is 2 years? For example on March 23 I can exit deal with profits if HUT price is for example 1.30$ then I exit with profit 24$. All green area is ok for me..
So, risk/reward here is 116/24 (+ transaction fees).
If I can repeat this 5x in a row (with 84% success probability for each try).. Then with ~116 usd capital I get 120 usd profits (in 5 months).
Question regarding red zone.. in case I am in the red zone I automatically lose because I am required to purchase stocks as Write PUT deal it means.. or I can wait till expirity date and hope for retrace..? hmm.. If I can wait for a retrace then if I understand all this right - then it sounds for me interesting to learn more and maybe try with some demo money..
Found here an interesting calculator for options - and calculated some examples - you can see here one calculation.
As I understand the riskiest (and most rewarding) is Writing (Sell) Puts/Calls.
In the example which I provided above, I see this:
As I understand - 1 deal looks like this:
I enter Write of PUT with 84$. If all goes wery bad then I lose additional 32$ (which must be on my account - I am required in the worst scenario buy 400 HUT shares for a price of 0.50$ even if 1 HUT cost is 0$). Total max loss is 116$ (+ transaction fees). Right?
But.. if I stay in the green area... like here:
Then I can exit at any time with profits? No matter that the expiry of my PUT is 2 years? For example on March 23 I can exit deal with profits if HUT price is for example 1.30$ then I exit with profit 24$. All green area is ok for me..
So, risk/reward here is 116/24 (+ transaction fees).
If I can repeat this 5x in a row (with 84% success probability for each try).. Then with ~116 usd capital I get 120 usd profits (in 5 months).
Question regarding red zone.. in case I am in the red zone I automatically lose because I am required to purchase stocks as Write PUT deal it means.. or I can wait till expirity date and hope for retrace..? hmm.. If I can wait for a retrace then if I understand all this right - then it sounds for me interesting to learn more and maybe try with some demo money..
There is almost no risk 
to sell puts/calls in forex option futures if you sell them far away in the green zone, almost as far as you can from the current price (but not quite). There may be a little draw-down but pretty short-lived and balanced out by the strategy of selling options only in the direction of the price. 
In this strategy, you never leave any sold puts or sold calls open if the price reaches the sold call or sold put level because that would be unlimited loss potential that you cannot control - but this is by design a very rare occurrence that you don't even care about.
I only looked at forex option futures so I cannot attest this will work in other markets. There may be different behaviors there but since selling options is an insurance business by nature it should be the same hypothetically.
Not all options brokers offer a nice interface for options trading that's conducive to getting comfortable truly understanding and trading options.
There may be one or two only that really stand out. 
to sell puts/calls in forex option futures if you sell them far away in the green zone, almost as far as you can from the current price (but not quite). There may be a little draw-down but pretty short-lived and balanced out by the strategy of selling options only in the direction of the price. In this strategy, you never leave any sold puts or sold calls open if the price reaches the sold call or sold put level because that would be unlimited loss potential that you cannot control - but this is by design a very rare occurrence that you don't even care about.
I only looked at forex option futures so I cannot attest this will work in other markets. There may be different behaviors there but since selling options is an insurance business by nature it should be the same hypothetically.
Not all options brokers offer a nice interface for options trading that's conducive to getting comfortable truly understanding and trading options.
There may be one or two only that really stand out. In this strategy, you never leave any sold puts or sold calls open if the price reaches the sold call or sold put level because that would be unlimited loss potential that you cannot control - but this is by design a very rare occurrence that you don't even care about.
in play on the sell option side so you can modify this strategy to limit 
drawdown risk further. 
a) BUY 1 CALL
and 1 PUT
at the very, very cheapest price level of a call ABOVE the current price
b) BUY 1 CALL
1.02^200
