Options trading

Intel / Eng
drunkmonk

Go to company page Intel Eng

drunkmonk
Jul 10, 2019 21 Comments

I am new to options trading. I've watched videos, read articles, had people whiteboard to me, but I'm somehow not able grasp it. (I guess I'm just not a finance person)
Could someone explain it here like you're talking to a nine year old? TIA

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TOP 21 Comments
  • R/wallstreetbets
    Jul 10, 2019 1
  • Chase
    wordladder

    Go to company page Chase

    wordladder
    They’re really not that hard to get - in a general sense you’re trading based on estimates of potential of future gains or loss of a stock for money(premium) in the short term.
    ELI9:
    You’re a candy maker and you know you will have made hundred pieces of candy on October 1st. You want to sell this candy in October to pay rent at your candy factory, but because of Halloween there will be a ton of candy for sale November 1st for cheap, so if you don’t sell it before November 1st at at least $1/candy you’re out of luck. You write a call contract, stating you will sell 100 pieces of candy at a fixed price of $1 on October 1st.
    I own a candy store and I know for sure that I will need a hundred pieces of candy in October to sell.I buy your call, paying you money then, so that I don’t need to worry about the price on October 1st and can have a fixed estimate for the cost of the inventory today. The price of candy on the open market may be $.75 on October 1st, in which case I ignore your contract, or it might be $1.25 and I saved money. However, I needed a guarantee of having candy, so I’m willing to pay the fixed amount of premium before October.
    Jul 10, 2019 0
  • New
    Croatian

    Go to company page New

    Croatian
    Do NOT trade options, you will invariably get burnt up. Rather invest in stocks , you won’t at least time decay to 0
    Jul 11, 2019 8
  • Intuit
    CwuK88

    Go to company page Intuit

    CwuK88
    Look up wallstreetbets for the best introduction to options trading
    Jul 10, 2019 0
  • Microsoft / Eng
    bobobuddy

    Go to company page Microsoft Eng

    bobobuddy
    Expecting an explanation here in text is really not gonna help you. So I can point you to some more resources that I have used. First one is Optionalpha.com which has tons of free videos. They have lots of podcasts as well but I would suggest go through the free courses before. Tasty Trade videos on YouTube are good too. There are a few more but these are amazing starters. If you need more dm me.
    Jul 10, 2019 0