I dabble in stocks and mutual funds and have done fine even given the current market conditions.

I've heard a thing or two about options, but have never quite wrapped my head around it. I've been looking at a few web resources that are trying to explain them, but it hasn't clicked yet. I'm sure once I get a handle on it, it'll make sense. A friend of mine does a good bit of trading in options, even making decent money right now, but I feel like I can never understand them when he tries to explain them.

Anyone understand what they are and how they work? And be willing to take a minute to explain them to me? Call? Put? In-the-money? Out-of-the-money?

thanks!



Edited 1 time(s). Last edit at 07/07/2008 09:04PM by clay.

Maybe this would help? [www.amazon.com]

Options are tricky. They are how most of the money on the stock market is made (most of the money lost in the market is via buy and hold.)

I knew a guy who had a full service options business. Minimum investment was $50k. It was doing very, very well. Then the market took a dive and the brokerage decided not to honor the stop loss order that was in place.

Best time to buy options is just before an earnings report.

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[www.optionseducation.org]

[www.cboe.com]

[www.thinkorswim.com]

the last one has free software that has a lot to wrap your head around.
There's a lot to learning it. I still have much to learn.
You can take a beating quickly as well as have a nice fast profit.
Couple moves in the last few months have returned 100% in a few days.
Couple others have lost that over time.
I need to learn more of spread trading, to adjust broken trades.

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!#$@@$#!

proofraed by OwEn the c@t.

Rule #1: never play games for money with professionals

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Embarassing myself on the Internet since 1978.

Your best bet is to just send the money to me.

My gratitude is most likely more than you will get trading options.

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And we should consider every day lost on which we have not danced at least once.
—Friedrich Nietzsche
Western Massachusetts

Quote
blooz
Your best bet is to just send the money to me.

My gratitude is most likely more than you will get trading options.

huh. that sounds like a pretty good deal--what's your address?

PM me. Really, my gratitude is worth millions!

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And we should consider every day lost on which we have not danced at least once.
—Friedrich Nietzsche
Western Massachusetts

Quote
raz
Rule #1: never play games for money with professionals

In this case this is good advice. I have known some of the big players personally and can assure you that you are out classed. You can also be sure that you cannot begin to really get your head around it unless you are at the very least a top quality mathematician or physicist.

There was a Nobel Prize given for valuing options. The field has progressed a long way since. You can start investigating by looking at work by Fischer Black, Myron Scholes , and Robert Merton.