can someone explain day trading weekly options to me?
never traded options, want to learn
scenarios (first 2 are weekly options)
1. if i buy 100 calls options of stock X at 0.5 and it goes to 2.0 in 1 hour, i can sell it right within the same day?
how much does it initially cost me? 100 x 0.5 = $50?
how much do i made? 100 x 1.5 = 150?
does the price of the stock matter at all in terms of how much i make? like if when i bought stock X it was $15
-
if i buy 100 calls of stock X at 0.5 and stock price never goes up so option price goes down to 0.1, how do i lose money? i thought i can just let it expire and i just lose the cost/fees that i paid for? can i lose more? if so how?
-
if i buy lets say dec 2012 option call, when am i allowed to sell that option? anytime between now and when it expires?
-
what is the specific day of expiration? how do i find out?
i don't want to exercise actually paying for the stock, i want to try to play big boys like google and apple so don't have the money, just want to trade the option contract itself
Yes, provided you have fulfilled PTD requirements. Price of stock drives price of option, once you have accounted for price of option, price of stock means nothing.
You lose the $50. And the commission. Aka >100% of your stake.
Yes.
Weekly = Friday obviously. Monthly = third Friday of month.
thanks for the quick response. so why would someone NOT want to play weekly options? it seems the risk is lower and reward is higher than just buying and selling?
//EDIT: what are PTD requirements?
Because when you buy stocks, you rarely lose 100% of capital? Not sure how you're of the opinion that risk is lower.
Options expire and premiums decay. Stocks don't.
You have to be confident that any major move happens in that week.... otherwise you basically pay your premium for nothing.
Options don't pay dividends.
PDT = pattern day trading. Google.
Because, as F. Ro Jo has explained, you can lose your entire stake. The risks are higher than just buying a stock.
The options will have the expiration date specifide when you buy them. You'll know exactly when you need the stock to go up (or down) by in order to make money.
Based on these questions you should not even consider trading options, nevermind weeklies. Weeklies are the riskiest of options due to premium erosion and the tight time frame.
Read options volatility and pricing by Sheldon Natenburg and then get back at me.
FYI: I heavily trade apple weekly options.
Shouldn't it cost you .50(100)(100) since you are buying 100 call options and there are 100 in each contract?
ok i just saw this online and it goes against what people said...
this guy said he bought 20x weekly $2 puts sold it at $4 and he said he made $4k, but according to what you guys are telling me he should only make $40, explain? i thought every 1 contract you buy it's 100, i'm just flat out confused now
yes it is 1:100. in your original post you said 100 calls, which i took to mean 1 contract.
but yes, you should not be trading, not options, not equity, not futures. you have no idea what you're doing.
so when i'm putting an order in let's say today buy to open GOOG 2, is that really 2 or 200? do i pay 2x option price or 200x option price?
Each contract (each "call" or "put") is for 100 shares. So when you buy 1 call for $1 it will cost you $100 from your account. Note this is only for most equity options (stocks like AAPL etc). Other products may have other multipliers.
Also note that these options are priced very well based on volatility, plus you will be paying the spread, so don't think its easy to just go in and there and make money. Take some time to learn how they work and open a demo account first if you think its that easy.
Couldnt have put it better. Read a few basic books and you'd be able to answer your own questions easily. And get a practice account, best way to learn is to try it out without losing your bar money.
you can't buy 2. so 200.
why is it a bad idea to play options still? i see some weekly options have 100%+ gains a day
Because you don't know what you are doing. Read hull's options, futures, and other derivatives or something along those lines to figure out what you are doing first.
go for it champ. i hope you lose so much that you can't afford an internet connection. then we won't ever see you on here.
If you are new to options, weekly options may not be the best place to start given their high gamma profile. Make sure you have an understanding of the risks involved.
Just open up a virtual account and see how well you do playing weeklies.
Est exercitationem quo consequatur. Accusantium in autem nobis eos quae. Quia vel aut error qui tempore qui itaque est.
Nihil numquam alias placeat aut voluptatem occaecati cumque. Laudantium vitae nesciunt quo doloremque explicabo quo. Vero mollitia qui eos cum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...