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GameStop Corp. Message Board

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  • flyerd1 flyerd1 Jan 10, 2008 12:06 PM Flag

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    Another use for options is to raise capital ("once you understand them" & "if" you have the risk tolerance). I sell puts into fear (which raises the volatility (V) and thus the premium for the options). It's best to sell options into V because if you're a buyer your "paying up" into it and when the V decreases your options are worth less just because the V has decreased. By selling you're "getting paid" for the V and can buy them back cheaper when the stocks move in the opposite direction. "Or" you get assigned at a better price than you would have paid on the day you sold the puts.

    For Ex: "If" you were willing to buy GME at $50.50 "today", why not sell Puts that "if assigned" would actually result in buying for "less than" $50.50 like the trade I'm trying to get a fill on. I went out very far on this trade looking to get $13 paid to me upfront for the Jan(10) $50's in exchange for me saying "I'm willing to own GME at an equivalent price of $37. Going back to what I said b4; if you would be willing to buy it at $50.50 today, surely you would think that $37 is a steal... Then you can use the $13 cash for other investments. GL with your learning

    GITA (Good Investing To All)!!!

 
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42.77-1.27(-2.88%)Jun 29 4:01 PMEDT