Anyone doing option trading? I am new into this field and would greatly appreciate any insight. There are so many strategies, but I will focus on long calls and covered calls. Does anyone do covered calls? I think its a great way to make money, as you are essentially renting your stocks on your own terms and gathering a nice income in the process. I have heard that a website called poweroptions is extremely beneficial. Please share your thoughts, and please comment on power options as well.
I have dealt in trading options for a very long time and have been involved in trading all sorts of strategies, long, short, covered, naked, condors, butterflies, etc., you name it I have traded them. It is a very fast moving market and for new comers i will suggest only long calls and puts as a starter till you beter understand it. Otherwise you can burn your fingers. One of the advantages of trading options is that you can make lots of money by putting up relatively little amount of capital. The downside is that you can lose all of the capital you paid to buy the options. The normal options contract is 100 in States and 1000 in UK. So for example if you bought one contract to buy a share at a certain price within a specified period of time for say $2, your total outlay will be $200 plus brokers fees. That is the maximum amount of loss you can suffer if the share fails to rise. If more people are interested I can explain the mechanics in greater details here.
ehsan bhai thanks so much for ur reply. I have already been doing long calls (leaps) with options expiring in Jan-06, so I am trying to be safe, long-term. Additionally, I have developed interest in covered calls, as it is a good way to generate constant, steady income based on the stocks you already own. As I said earlier, there is a product called poweroptions which is a great help in covered calls. Please tell me whats your take on that product, and covered calls in general. I am asking this question from US trading point of view, as I know you are based in UK.
I have no info on poweroptions. If you can post some details or give me the website where I can read about it, I will be able to comment on it. You said you were dealing in leaps. Are these covered written leaps or are you just long of them. If you are just long of the leaps you can earn some income by writing short term against them. However if the price rises above th strike price than either you will have to buy at a loss or exercise your own leap at the same time. Slightly risky but a great little earner if played correctly.
Ehsan bhai,
Are we interested in a little tutorials on options? Is Pope catholic?
Please give us a basic tutorial on options.
Shukriya.