Posted by fixdgear on 20th of Jan 2011 at 07:57 pm
no essay needed....in the money means the option has intrinsic
value so therefore will move more in tandem with the stock. out of
the money is time premium meaning you are buying a cheaper option
but based on future movements further out and therefore has less
movement near term or until the option becomes in the money
IF youre right...the %age gain can be greater if the stock moves
sooner rather than later but the risk is time errosion. eassy comes
into play when you put on on flying condors and naked
options; writing options ...etc..
also of note: if the stock is volatile it will have a greater
premium and spread price structure.
and yes puts calls come into the same scenario..one bet is the
stock rises the other is it goes lower..one thing with
options...you know immed the most you can risk..or
loose...lol..
thanks -- not to ask
how to choose options?
Posted by Michael on 20th of Jan 2011 at 07:08 pm
thanks -- not to ask you to write an essay - but can you tell me why in the money? And is it the same for puts and calls?
options
Posted by zach06 on 20th of Jan 2011 at 08:26 pm
If you google Options or Options Strategies... you can find plenty of stuff on the net.
options
Posted by fixdgear on 20th of Jan 2011 at 07:57 pm
no essay needed....in the money means the option has intrinsic value so therefore will move more in tandem with the stock. out of the money is time premium meaning you are buying a cheaper option but based on future movements further out and therefore has less movement near term or until the option becomes in the money IF youre right...the %age gain can be greater if the stock moves sooner rather than later but the risk is time errosion. eassy comes into play when you put on on flying condors and naked options; writing options ...etc..
also of note: if the stock is volatile it will have a greater premium and spread price structure.
and yes puts calls come into the same scenario..one bet is the stock rises the other is it goes lower..one thing with options...you know immed the most you can risk..or loose...lol..
Michael - I generally pay
Posted by matt on 20th of Jan 2011 at 09:32 pm
Michael - I generally pay options like fixdgear goes, I buy options near the money instead of way out of the money.
great explanation, thanks fixdgear! Options
Posted by frtaylor on 20th of Jan 2011 at 08:04 pm
great explanation, thanks fixdgear! Options are complicated, w/ all those Greeks....