I tried a short explanation. I could not say all. Some may bash me, if I missed some thing. I could answer most questions about this strategy and the ups and downs to it.
Once I had calls on Chrysler. I was able to control more shares at a fraction of the price.
If Chrysler would have gone down or stayed under the strike price I would loose all my investment when they expire.
That has happened to me too.
In this case Chrysler got bought out by Mercedes many years back and I made out great with control of Thousands of shares. Had I bought the stock instead of the calls. I would have had much less shares.
I was a happy guy when I heard the news. The guy who sold the calls missed out that time and I got all the gains.
My money was at risk more than his though. Calls and puts go to zero it the time goes bye and the stock does not go your way.
I been learning this since 1973 with my first 200s of Champion home builders. lol I doubled my money and been in ever since at a young age.
Do I know what I am doing. No! I do not. I got slaughtered in 2000,20007, etc.
I did great on Black Monday Oct 1987. Look it up. 25% drop in one day. I sold all the day prior by luck and bought all back that MONDAY sold it all again the next Friday for huge gains.
Later in those other years I gave it all back. lol
Still here trying,but no greed and play it safer. THAT TRUELY WORKS BETTER.
Pigs get slaughtered. GLTU
I WILL TRY TO ANSWER ANY
I could call you if it was possible.
Calls are the option to buy a stock at a given price in the future. Time is valuable.
Some one paid up to $145 Friday to buy 120 calls, equal 12,000 shares of stock in DEC, and March for $7.50 per share. So in effect they are paying $7.50 plus the premium of up to $1.45 = $8.95 in the future. Rather than buy the stock they can control more shares for a fraction of the money. There are upsides and downsides to this.
They are putting their money up front thinking the stock will be higher than that at the time.
As time goes bye the calls value eventually goes to zero unless the stock is higher than the strike price of $7.50
So the person who sold the calls already has that in their bank, and they could sell calls again etc. If the stock is higher the person who bought the calls gets the stock for the price of $7.50 and could sell it or keep it.
I could say so much more.
I sold calls three times on 4000s of PES I am holding for about $0.80 each time. This time I will loose the stock. Oh well. I made rent on the stock while I held it and a small gain too. I will not look back. Made a decent return while the market was shaky . I will probably watch them take my shares in March for $7.50 even if they are much higher.
That is the down side. I still made a gain of $0.80 three times.
You do the math.
I did cover the calls twice when the stock came down over the last two months for $0.40 each time. This last time the stock is up and will probably not cover the calls unless time goes by and the stock just stays around here.
I made $0.40 twice and $0.80 once plus the gain from buying the shares at $6.85 to probably loosing the shares at $7.50. I can't complain.
It ties your hands though so It is a strategy ,but like others ups and downs.
I would love to explain better talking some how.
Its like owning properties and getting rent while you hold. GLTU BE CAREFUL
Some people like this some do not.
Vinnie. I know and meet many that feel the Tea party is the future. really. No bashing . There are a lots of us who were poor, worked hard and see too much waste. NO bashing just truth. GLTU
I was able to hit the target only 7 out of 10 from 1000 yards without scope. M14, Imagine with scope.
I actually have a torn muscle. It will bring me down if I can not workout like I always have.
Told it will not re attach on its own. No chest or shoulder exercises especially not heavy. We will see. I never give up.
lol Stupid me .
I am 63 but in decent shape. Always worked out since the Marines. have a full gym in my basement. Bike a lots of mile per week too.
All my life I could do 50-80 pushups easily and some times with my work out buddy pushing me I would do over 100 -111 my record without stopping.
No sad news. I tore a muscle in my shoulder falling off my bike far from home.
THAT SUCKS. The supraspinatus tore. Any help with decent info would be appreciated. I still worked out today, but it was tough using shoulder.
Sorry for the babble. You seen a good guy.
TY buddy. I served in Vietnam, Dog patch . near Da nang
Later went to Japan(awesome there after Vietnam.
Then in force troops ,went on one pacific cruise. Dropped me off on a mountain top in Korea for a week.Lived in a hole on the side with my shelter half as a cover.
Later went on two MED cruises. Italy,Greece,Spain,France,Turkey and few smaller places.
I am so proud of serving.
Some here did not serve ,but they would if they could. Others wish they did . Then the freeloaders ,wow do I wish they served. They would look at things 100% differently and this would be a better country.
I gave a heads up on NES,PES. read my message. No pump.
some one today bought 3000 calls for each of the strike prices of $5, and $7.5 for Dec and March on PES.
Do your research. This is very unusual high volume on a low volume stock.
I do own 8000s but I been playing this on for a year now.
I am trying to help. It is worth checking out. NES too is starting to move again and the $3 calls for a year out are great percentage value.
Thank me later or bash me , but check it out. GLTU all
Like my MARINE, T shirt says.
Kill them all let God sort them out.
I wore this to the infield of the Kentucky derby.
I SOLD MY 200S GLW for a $600 plus gain in one day. Could have made $800 now but ok with me. Sold TCK twice in as many days. a days pay or weeks pay is good enough.
Been lucky this year. Holding lots of cash for these times,but do not keep it in too long. Just trades except for PES,NES.
Really. Rich people can loose that money and poor can get rich in AMERICA. If they are willing to work.
Mexicans come here and find two jobs each.
I agree jobs are not paying as well as we like, but that's what one has to work with. Advance one self and make the best of what life gives you.
It woked for Opray ,Maic Johnson, Tiger woods. ,Micheal Jordon, and all the execs at Xerox,lol.
What would these people have if not in America.
Thank you America for bring us here. Although under harsh condition we did well for the future.
We can not do any thing about the past and tomorrow is uncertain. WE APPRECIATE AMERICA! That in Ebony magazine 2012.
I served this country . What have you done for it.
I will not ever get out. I will fight in the streets when needed to get people like you out. Vietnam style. I still train with a few others. Any time liberal chicky.
Nice to know. TY. I plan to get in asap. Great dividend. good percentage on option calls out to next Jan.
I wish I could see insider buys and sells.
TCK being Canadian . I can not use my normal insider research.
No Offense he is not my president.
I served in the Marines in Vietnam. I always respected the office until now. That trouble maker from Chicago is nothing . I lived in Chicago. He was a sissy. Pan handler knocking on doors for the dumbo's