Lot a option traders for GOOG stock in the yahoo message board.They keep saying 550,560 & 575.POT is a good stock. I bought 20 shares of POT at 177.65 on 5/1/08 and sold at 203.53 on 5/7/08.Then bought GME after seeing it dip to 50 and rebound.
I'm not that good at explanations. I suggest that you contact your broker. By law they are required to provide you with a booklet explaing the in/outs of option trading. You can also GOOGLE option trading.
In any event, don't rush!
I will have to give options a try.
How many shares do you usually buy lionelman17? Does option trading cause the stocks to trade from 40 to 50, 50 to 60 and $20 upside for GOOG/BIDU? If GME dips below 50, do options traders sell or are forced at a certain point. Thanks lionelman17 for info. Do you set money aside after the earnings like GME comming up.Sometimes the report is really good and stock sells off or skyrockets?
Using GME at 3:55 today as an example.
Buy shares at $54.60
Sell June 60 calls at $1.35
If its less than 60 on the June expiration date you keep the premium and the stock and you can go all over again.
If its more than 60 you still keep the premium and you are forced to sell the stock at 60.
If its right around 60 you can, if you wish, buy the calls back for maybe $.10 or so and start all over again.
In my opinion, trading CALL options is not that hard if you are NOT greedy. I go for many small profits and don't look for homeruns.
The conservative approach would be, for example:
Buy a stock at say 50.
Sell covered calls for 55 a couple of month's out.
If you get taken out at 55 so be it, you made 5.00 plus the premium.
BUT, if the stock goes to 60 you don't profit in excess of 55.
AND, if you time it right you might get a dividend (if it pays one).
I sold today at 54.50.Had bought at 51.26 on Monday.Wanted to hang on till 56 range.No time to watch with work.I hit the last run up from 45 to 54.Will keep a eye on earnings. Is trading options easy?
Follow up on crazy price swings.
On 3/24/08 I sold covered calls (July 55's) for $4.30. Today they closed at $4.30.
So whoever bought them (if they kept them) is dead flat after all this time.