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  • xtradersdotnet xtradersdotnet Oct 12, 2012 2:20 PM Flag

    question on put options...

    mav my experiance buying protective puts is its usally expensive and will eat into your profits, for example, you buy 10000 shares of ABC @ 10.00 then you buy puts at the 10.00 strike price for say .50. so your true price of procection starts @ 9.50 and below if the stock never goes below 9.50 and those options expire now you are going to buy them again for the next month, say same thing now your protection kicks in @ 9.00 and below ect but now you have to wait till the stock goes past 11 just to break even, and the cycle goes on and on.

    to me protecive puts are worthless. If you want to protect profits sell your stock, if you want to protect your investment well there is really no great way to do that and dont put all your eggs in one basket or buy ETF or Mutual Funds. I guess protective puts work in a short term trade or during some thinking like earnings but for long term trading they will eat your account alive..

    JMHO.

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