help with option trading, page-4

Stixy,

Hello, Mate.

Firstly, you want to get some professional help on this, as it can be very confusing when starting out.

Generally, if you think the price is going to fall, you buy a call option...i.e. WPL is $52, you reckon oil is going to tank, sp will fall, so you buy a call at strike of $55. The call option premium is $ 3.50, and you know you are never going to be exercised. You pocket this straight away, and watch your WPL shares drop. That's if you are doing a covered call. Which means you are going to have to buy the shares first, but why would you do that knowing they are going to tank. You can go naked, but your broker is going to have like that idea first; get my drift.

Like I said, get help first. Many people lose more money than they make, on option trading. You know, people don't just give their money away.



Cheers, Skip