daytrades july 21 afternoon, page-71

pwpl - am no expert but will give it my best on your 'options' questions. I have always really appreciated the answers I got to my questions when I began.

You get lots of leverage in options, so it is possible to make large gains but you take a lot risk. All positives are felt in multiple and all losses are as well. Unlike the 'heads' (JKA in this case) if something bad happens in options you can end up holding the bag and either take a loss, or pay a small fortune to convert to heads and try for gain there. I have lost money, had to convert for thousands and made lovely gains in the last few years on options.

For the share you are considering

JKA - 13c
JKAO - Exercise price 20c exercise date 31/12/12
JKAOB - Exercise price 15c exercise date 31/10/12

Questions I ask when considering the option
- Are they 'in the money' Yes is lower risk, no is higher risk
- Do they expire soon (as in a few months time - and you can't count the last few weeks) Yes is higher risk and no is lower risk
- How long is your time frame? Does it match the exercise dates?
- Is this a sizeable % of your portfolio? yes = stick to heads
- Are you going to stick to your trading plan or do you risk getting sucked in?

If anyone out there cares to offer further insight or rightly correct me, happy to hear. Best of luck pwpl!

IMO of course