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Renren Inc. Message Board

  • makesome.dough makesome.dough Feb 14, 2013 3:01 PM Flag

    Question about Options

    I looked at the options chain for RENN and there is absolutely no time premium given to the stock. For example, the Jan 2015 $1 option is selling for $2.30. This equates to the present price of the stock. This kind of pricing is the same for the 2014 options.

    So here's the question, if you truly believed this stock was going to jump, why wouldn't you just buy the Jan, 2015 options? You get two years to play the stock for a $1 discount.

    Lastly, I've never written options so I was wondering how to do it. When I pull up the options chain with my online broker, I have the options of "buying to open" ; "selling to open"; "buying to close" or "selling to close"

    Which do you use if you're buying a call to bet on the stock moving up?
    Which do you use if you're selling a covered call?

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    • if your selling a call it is sell to open (probably ought to stick to covered as the possibility for naked call selling is unlimitted loss). if you just want to buy the call then it is a buy to open. when selling the call you sell to close. when buying back your covered call if you choose to you would buy to close. hope this helps be very careful and read more books before getting into options. ive lost fortunes being long calls and puts but eventually decided the best way to play options is to be a put seller or covered call seller.

 
RENN
1.83-0.01(-0.54%)Jun 29 4:02 PMEDT