LucyLue
8 posts
msg #91437
- Ignore LucyLue |
4/20/2010 1:48:47 PM
iŽm quite new to options and i have a little question.
Which strike price is best to choose and why ?
cheers.
LucyLue
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gmg733
788 posts
msg #91445
- Ignore gmg733 |
4/20/2010 6:35:14 PM
I don't want to be rude, but the answer is it depends. If you are new to options, I highly suggest you read about the greeks and make sense of them. Because there is no answer to your question really.
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alf44
2,025 posts
msg #91447
- Ignore alf44
modified |
4/20/2010 6:57:56 PM
...the answer to "her" question ... IS ... there is no answer !
And your reply was excellent ... good job !!!
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crunkle
54 posts
msg #91468
- Ignore crunkle |
4/21/2010 12:33:38 AM
First are you a buyer or a seller? The strike price of an option can be considered a measurement of risk vs. reward. The cheaper the option, the more likely it is to expire worthless. I've read where somewhere around 80% of all options expire out of the money. Great for sellers, not so good for buyers. It's like betting on the longshot at the race track. Most of the time you tear up your tickets. Once in a blue moon though..............
On the other hand, an in the money option can be a good proxy for a stock. Not too many of us can buy $275,000 of Google but I could afford to control that much stock with the purchase of 5 calls.
In any case, like the posts above say, there is no one answer. The same option could be used in multiple ways by different traders, depending on what they are trying to do.
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LucyLue
8 posts
msg #91470
- Ignore LucyLue |
4/21/2010 3:21:01 AM
thanks for the replies..
i have been reading about it but thereŽs a bit of a step from reading and starting to trade...
i think iŽll papertrade it on TOS for a couple of weeks before i go live.
LucyLue.
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LebowskiUrbanAchievers
56 posts
msg #91479
- Ignore LebowskiUrbanAchievers |
4/21/2010 12:01:19 PM
Lucy papertrading is good. Just remember options look great because they are cheap, but cheap can get expensive real quick if you don't know what you are doing. Trust me.
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sbuck143
88 posts
msg #91494
- Ignore sbuck143 |
4/21/2010 4:14:51 PM
I recommend reading everything you can about options before throwing even one cent at it.
Thomsett's books on Introductions to Options is a great jumping off point.
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gmg733
788 posts
msg #91517
- Ignore gmg733 |
4/22/2010 8:08:34 AM
I am not affiliiated with OptionMonster, but they have a ton of free Options Webinars that are pretty good. Some things you won't understand, but that is ok. When you hear it and hear it and get bits a pieces, it will start to click.
Open an account over there and go to the "Education" tab and click on the archives. It is free and at no cost. There is a slew of presenations by many different traders, most of which are trying to sell something, but there is no commit to buy anything.
You have to understand greeks to trade options successfully. Options are extremely powerful and flexible if used properly. When used improperly, you can blow out an account.
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