DislikedHi kill,
I bought that $0.2
where is you SL brother.
this is the trade which doubled my account.Ignored
for example I bought some July 28 calls for dxd as i saw a low vol test today and think the markets are going down tomorrow ( dxd is a bear etf on the dj )
the calls are July 28 and cost 2.15 each x 100 shares x 2 contrcats = $430 cost . If dxd goes to 29.5 I may make about 50 % on this investment ( small fry but I am just getting into option traidng )
The risk on the trade is $430.... that is all , and that is only if the option expires worthless. I canot get large draw downs on acocunt or wipe my account out.
So if i have 20 k in the account and want to risk 2% I play options for about $400. If I make half of that I have just made 1%. MAX RISK IS 430 and more liekly I can get out of the option and get some of my money back if trade does not work for me. Sometime on very aggressive plays you can make 400 to 500 % return on options ( say you buy a $10 stock calls for 50 cents and the stock goes to $20 , liekly you have made about $8 on your 50 cents)
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