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1

What draws people to stocks in the first place is that it's not a zero sum game. Stocks grow when the economy grows. When someone buys a $900 iPhone, the profits add to the value of AAPL stock. It's like a reverse casino. In a normal casino if you play the slots 10,000 times spending $10,000, you will gave gotten back an average of $9700. With the stock ...


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Let's say shares are $80 today, and you buy call options with 12 months with a $100 strike price. You are betting that the shares will go above $100. The option price is based on the expectation that the shares will go above $100, and how far. At this point, anything could happen. The shares might go down (you lose everything), they might remain the same (...


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With options, time is not on your side because they depreciate. They are a race against time. Investing is hard enough but making money with options is even harder. I only trade options a few times per year only to make an extra 3-5% alpha per year. Options are priced so you only make money if the stock price moves MORE than the expected return. This ...


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When I read your initial question, my first guess was that this might be about buying options before earnings announcements and the losses due to implied volatility contraction after the EA. My second guess was that this might be about how put premium inflates before a pending dividend. With the data that you posted in your comment, these were bad ...


3

You can exercise an American option at any time, including immediately after you buy it. However, in if there is any time premium remaining in the option, it would make no sense to do so because you are throwing away time premium that could be salvaged by selling the option to close (unless the time premium is less than your closing costs). Exercising a ...


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You can, but it is easier just to throw your money away. The process you describe can never result in profit, as the option is priced according to the underlying security and the risk. Of course, something relevant can happen 3 milliseconds after you successfully buy the option, and there is a profit (or loss) possible. But even then, selling the option ...


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