Comments on: Beating The Stock Market Trends

By: SWH

SWH — Wed, 10 Mar 2010 12:27:59 +0000

No problem with your logic on buying/selling puts and calls, but I’d stay away from selling puts and calls till you become more experienced as there is unlimited downside risk by selling (except for when you are selling covered calls).

This covered call strategy works well to earn a little extra income while you are long the stock. As long as you can sell at a good enough price to cover expenses and have the strike above the price you bought the stock at, you’re OK.

As for placing the buy to open call order, this depends on how confident you are that the stock price will rise. If very confident, place it at the midpoint of the bid and ask. If no sellers, then you may want to increase it a nickle.
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By: ovahare

ovahare — Wed, 10 Mar 2010 12:25:59 +0000

All options that you are first purchasing are considered "to open" wether its a call or a put. the price for a limit order is up to you. Dont be scared just go ahead and place amrket order and start out small first. Email me if you would like. I have my series 7 24 55 and 63 and been trading since 88.
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By: Peter P

Peter P — Wed, 10 Mar 2010 12:23:59 +0000

If you don't know the answer, then you should not be buying options. If you keep it up, you'll lose all your money.
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By: supremethirdeye

supremethirdeye — Wed, 10 Mar 2010 07:21:34 +0000

What price should I use when placing a limit order to buy options?
Please tell me if my logic is correct, as well as answering the price question. If I think a stock is going to go down, then I will want to place a "buy to open" order on a short term put. Or if I think it is trending upwards, then I will want to place a "buy to open" order on a medium term call, especially if I feel sure the market will beat that price. Is that right? If I understand correctly, the right time to "sell to open" a call is any time that you feel sure the stock wont rise above that point before the call expires.

What is the right price to enter when placing a limit order to "buy to open"? The bidding or the asking? How about when selling?
To Peter P: No crap Sherlock, why do you think I am asking the question? (before I start trading)