fficeffice" /><o></o>></o>
Have you tried covered calls?I can?t see anybody buying and selling stocks not being interested in options. To me understanding options is essential if you want to protect your profit, generate reoccurring income, and lower your cost basis for owner stocks. Options like anything you don?t have a mastery of is risky, but once you have this tool in your arsenal you can make money no matter which direction the market is going.
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com
I like the fact I can put down a small sum of money and control a large number of shares of a stock. For example in June I brought 10 contracts TRA 17.5 Call for a $1.15 (1 contract = 100 shares). Therefore, I was in control of 1000 shares of TRA for (1.15 X 1000 = $1150). TRA was trading at the time about 16.00. It would cost me $16000.00 to own the Stock. TRA price jump up to around 28.00, and I sold my 10 contracts for 9.10 (9.10 x 1000 = $9100).
<o
Also, option allows you to hedge against a stock going down. If I know because of earning, or some other event the price of a stock you owned is going down you can purchase a Put. The Long Put makes money when the price of a stock decreases. I use this instrument mostly during earning. However, my favorite option tools are the credit spreads where money is deposited into your account, such as the Bull Put. If don?t understand option you are likely to lose money. I would advise everyone to take a course, or set up a virtual online account to practice trading options before jumping in. Options to me just help level the playing field if you going to trade stocks.
I can’t see anybody buying and selling stocks not being interested in options. To me understanding options is essential if you want to protect your profit, generate reoccurring income, and lower your cost basis for owner stocks. Options like anything you don’t have a mastery of is risky, but once you have this tool in your arsenal you can make money no matter which direction the market is going.
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com
I like the fact I can put down a small sum of money and control a large number of shares of a stock. For example in June I brought 10 contracts TRA 17.5 Call for a $1.15 (1 contract = 100 shares). Therefore, I was in control of 1000 shares of TRA for (1.15 X 1000 = $1150). TRA was trading at the time about 16.00. It would cost me $16000.00 to own the Stock. TRA price jump up to around 28.00, and I sold my 10 contracts for 9.10 (9.10 x 1000 = $9100).
<o
Also, option allows you to hedge against a stock going down. If I know because of earning, or some other event the price of a stock you owned is going down you can purchase a Put. The Long Put makes money when the price of a stock decreases. I use this instrument mostly during earning. However, my favorite option tools are the credit spreads where money is deposited into your account, such as the Bull Put. If don’t understand option you are likely to lose money. I would advise everyone to take a course, or set up a virtual online account to practice trading options before jumping in. Options to me just help level the playing field if you going to trade stocks.
Yes, writing cover calls lower your cost basis in a stock. The only risk is your stock may be called away if that short call goes in the money (ITM). Therefore, I use cover calls on stocks that are stagnant (Not Moving) or slightly bullish.
