Recent

% | $
Quotes you view appear here for quick access.

North American Palladium Limited ┼×irket Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • spectra64 spectra64 Feb 9, 2008 8:15 AM Flag

    911 on Gold Drop

    HOw does the writer of call lose money. IT was my thought the downside risk writing call was that the stock could be called away and lose his stock, but till get to keep the premium.

    That is someone would exersice the option...


    \

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Options are a zero sum game between the options holder and options writer. Covered call writers lose gain by having his positions called away at below market price. Naked call writers have net losses.

      I don't usually like options. I only play options occasionally when I strongly feel it must be a bottom or must be a top. I held no option before Dec. 10 and purchased the bulk of call options I now own on Dec. 11. The problem is out of money options are often times gambles, and in the money options gives you no leveraged buying power.

      Why do you buy $2.50 call options today? With the same amount of money you can buy more equity shares using margin.

      Why do you buy $5.00 call options? You pay the premium and get nothing get. At the end of day you still need to pay $5 on top of the premium, to acquire shares. You can just buy shares today for cheaper, and hold and let the position grow.

      Why do you buy $7.5 call options today? You pay the premium and still need to pay $7.5 in the future to get the shares. You can buy the same share today without premium, and far cheaper than $7.5.

      Options should only be an occasional play.

 
PAL
0.00(0.00%)