Khoa

just bought 2 aapl 200 call options today @ 2.12, thanks for the option lesson cthree. we'll see how this trade goes. i'm still trying to figure out how to close my position when the time come, hopefully before expiration.

martha

^^^ What month options on the AAPL?

cthree

I think he's looking at the October calls.

You "roll up" the options once you've doubled or you sell half or more depending on how bullish you are that it will continue to go up in price.

The $200's I bought were a roll up from the 180's I had. I bought 10 180's and then they doubled so I sold them and bought 10 200's. The 200's were about 40% the price I got for the 180's so in effect I took about 60% off the table but still have most of the profit in play. The delta of the options increases as you get further out of the money. Keeping in-the money options will pay less than trading them in for one further out of the money hence the benefit of rolling up rather than keeping some of the in-the-money calls.

How long you wait before you take profits is up to you and your plan, just stick to it. Understand that options are way more volatile than the stock so you could go up and down 30-50% intraday. Don't watch the price too much or it will freak you out. Concentrate on the underlying stock price instead. I usually defer any decisions about how they are working out until after the close. That prevents me from overreaacting. Set your goals based on the underlying stock and that should keep you sane.

Don't be greedy and let them go over 100% profit. Either roll up or sell them off, either way get your money off the table ASAP. Also, I suggest that you attribute any gains you make to pure dumb luck. Thinking you've got some kind of talent or knack for it is going to make you cocky and that arrogance will crush you. Be thankful, attribute it to luck and take the money and run.

The trick here is to be overjoyed with a double in every trade and not look for more. You don't need to make 400% so don't try. Don't put more money into a trade than you are willing to lose. Remember you're getting leverage so you don't need to risk as much capital to make a decent profit. The real goal is to double your money every quarter don't lose sight of that and don't risk more than you need to to reach it.

Good luck!

PS. Those options will reach about $4.50-$5.00 when the stock hits the $180-$185 range, about 5-6% higher than here. That's where you should be planning to sell.

vAnt

Whoops, I thought you posted that on the 22nd for some reason. $1.10 would of been a great buy! I have no experience in the options area and this thread has been more then helpful!

Khoa

so far, i am down roughly 30% on my profolio, i'm just using option to get back some of my losses. i've consider you suggestion on the YGE option and feel that i might be somewhat late on the september put. do u think it's wise to wait for it to reach $15 and play the oct call?

AZDavid

[QUOTE=Khoa,Aug 26 2008, 02:21 PM] so far, i am down roughly 30% on my profolio, i'm just using option to get back some of my losses.

cthree

I'm not exactly sure what 2 contracts are going to do for you portfolio as a whole but good on you for looking at other options

cthree

How many trading hours are between Friday at 3:24 PM and Monday at 10:12 AM?

Khoa

i aware that it's only 2 contracts, but since this is my first option trade, i just want to see how it works. i've learned about it the classroom, but never actually apply it in real life. beside, my profolio is pretty tiny compare to most of you.

magician

Not to put too fine a point on it, but the word's "portfolio".