The symbol for Eaton is ETN and the symbol for the calls I sold is:
ETN100717C00075000.

Bob

Reply here.

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Therefore, I sold the July call on Apache with a strike of 120 to open my
position for $2.50 per share. These calls were sold to open my position. I sold one call contract for each 100 shares of Apache that I own.

I am now short two call contracts for each 100 shares of Apache that I own. This means that if I am assigned on the March 120 calls I will be forced to sell all my stock and I will have to buy back the July calls.

My big fear in this trade is that out of the blue some major oil company is
going to make a large cash offer for Apache and therefore, I am going to lose
(big) on both call options. However, I consider this to be a calculated risk.

The symbol for the Apache is APA and the symbol for the calls I sold is ADWGD.

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Amazon Review

Review

“I have lectured with George at numerous investment conferences. I’ve seen these audiences captivated and enthralled by George’s ability to translate complicated financial concepts down to a basic level. Miraculously, this book brings that same magic to print. I heartily recommend The Options Course to anyone that wants to get serious about managing their own money.”—Jon Najarian, President, Mercury Trading, Inc.; Money Manager, PTI Capital Management; syndicated radio personality

“I have known and followed George’s work and contributions to this industry for years. In my opinion, if you want to learn the ins and outs of options, this is the man to consult. He has unselfishly helped thousands of others and could probably do the same for you.”—Bill Williams, Ph.D., C.T.A., author, Trading Chaos: Applying Expert Techniques to Maximize Your Profits

“I believe that the cornerstone of everyone’s success lies in the quality of their education and steadfast implementation of that knowledge. George Fontanills provides that quality education to those who are willing to learn, and a simple yet powerful method for trading options.”—Joe Tapias, President, Trade Center, Inc.

Buy The Options Course Second Edition: High Profit & Low Stress Trading Methods (Wiley Trading) at Amazon.

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I like the company and I listened to the conference call (via the internet) that the company held about their earnings. While I do not feel that First Solar had a great quarter, I do feel that they had an ok quarter.

Given the price decline in the stock, put prices were up. I sold the June put on First Solar with a strike of 80 for $5.10 per share. These puts were sold naked to open my position. Should I be assigned on these puts, I would be happy to hold First Solar for a long time. The number of puts that I sold at 80 is three times the number of puts that I sold at 170.

The symbol for First Solar is FSLR and the symbol for the puts I sold is +QHBRP.

If you have any comment reply to here.

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A stock market has various options for the investors to buy stocks. You could choose to buy any shares in the open market and sell them at a profit. The nature of stock market is such that you could stash enough dimes, if the going is good.

On the other hand, you could lose your fortune, if you had made a wrong investment, or your investment had incurred loses. That’s where Straddle option strategy comes into play.

It is a process through which you could make your investment safer by opting for various options. In fact, it also gives you a peace of mind, as you operate knowing that your investment is safer.

Investors, especially when the market is volatile tend to seek options that would not only make their investments safer, but also look to gain steadily during volatile market trade. You need to learn few tricks about the trade before you eventually jump to trade in the options category.

Why investors’ uses straddle option strategy? What is the function it plays for the benefit of investors?

Hedging: One of the most important reasons why investors look to go for options is to hedge their investments. Large institutions, who manage equally massive funds, do get careful while investing. For instance, if an investor, who buy shares from the market, he feels would give him enough profit, but in hindsight, he is scared that the prices might fall down.

In that case, he buys a put option on that stock. If the stock price rises, his investment continues to bring profits, but if the stock price falls; his losses would be protected by hedge option. Though, the profit for hedge funds are relatively lesser, still, investors can avoid losses by making their investment safer.

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I just found a great Option Trading Course. This course is the result and culmination of 20 years of thinking, planning, learning and practicing the material you will receive.

The course is created by a retail investor just like you who found a way to be successful and profitable trading stocks and options as a real business from my home office.

The trading methods I use are also used by professional hedge fund managers and market professionals who rarely, if ever, talk about their strategies.

Learn more about this fabulous course here.

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If assigned on these contracts, I will increase the number of shares of Exxon
Mobil that I own by about 8%.

The symbol for Exxon Mobil common stock is XOM and the symbol for the option I sold is .ODUMZ.

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Leverage

Buying a call option gives the investor a good option position that is similar to stock position. For example, if an investor would by 300 stocks selling at $50 per share, he would have to pay $15,000. But if he would choose to purchase three $20 calls (each contract representing 100 lots or shares), he will only have to pay $6,000 (3 contracts X 100 shares/contract X $20 market price). The investor would then have an extra $9,000 to spend or invest on his or her discretion. The process is obviously not as simple as that. The investor would have to know which call to buy to have a good option position, similar to stock position. However, if you are looking for a good investment without risking large sum of money at once, option trading is the better choice.

Limited Risk

Investment is said to be for the risk takers. This is good if your risk automatically yields to profit. But that is not always the case. In options trading, however, you can have unlimited profit potential and at the same time have limited risk. This is because options trading only give you the right to buy or sell underlying asset, and not the obligation. Meaning, if the price is not right at the end of the contract, you can just ignore and let the contract expire. If, however, you can profit for the change in shares prices, you can assert your right and pursue the contract.

For example, you buy a certain call option for $20 (strike price) that will end on the third Friday of March. On the expiry date, shares you bought are trading at $25. Definitely, you can instantly earn $5 per share and would have to pursue with the contract.

What if the at the expiry date is lower than the strike price?

Let us imagine that the shares you have bought went down to $15 or even $5 at the end of the contract, do you have to pursue the contract? No!

You just have to let the contract expire.

What have you lost then?

The option premium you paid the seller. Nothing more.

Unlimited Profit Potential

Say a certain call option you have bought is now trading at $38 per share. You can exercise your right to buy it for the strike price of $20 and earn $18 minus the Option Premium you have paid. This is just an example. The price of shares can go higher than that. And if you have carefully chosen your call, you can get the best profit without breaking your bank. Note: if you are planning to pursue the contract and buy the shares, remember that you have to pay the full amount. So at the expiry date, make sure that you have you the cash.

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First off, any trade, in fact almost anything that promises much profit surely carries with it lots of disadvantages. You only get what you pay for. As they say, you don’t get free rides. When you give more then you would most likely get more. The same principle works with the trade. With higher promise of profit come higher and greater risks to be taken.

So what makes option trading a high risk venture? It’s definitely the leverage. Leverage, in trade speak, is one of those crucial things that could make or break your trade. It gives you the advantage while taking away your potential profit if you pick the wrong option or the wrong timing to trade. Leverage is so attractive that it is among the things that make people want to enter trading but it is also disadvantageous when not properly used. In the case of options trading, there is higher leverage offered. Depending on which side of the coin you look, leverage could either mean boon or doom.

As defined in its financial sense, leverage is a relatively small amount of money you invest in something that could turn out big. Sounds pretty interesting but what’s the problem? Just like what was mentioned earlier, a higher leverage could mean higher loss of profits if the trade is mishandled.

Apart from these, risks of options trading can be seen from two different perspectives—the buyer’s risks, the seller’s risks.

Buyer’s risks

Options trading offer the possibility of losing your entire investment in a relatively short period of time. It is noteworthy that the main essence of options trading is to control a certain asset within a certain period of time at a fraction of the asset’s original price. So if you bought an asset that has an expiration of 3 months and within those months the stock remains at a certain price lower than what is profitable, then you could really lose all your investments very fast. Losses compound as the expiration date approaches.

This is the main reason why traders who are interested in this type of trading are advised to participate only with their risk capital.

Further, European style option, a classification of options trading, restricts its traders to exercising the option after the expiration date since it does not offer secondary markets. Also, there are certain option contracts that may further create risks as well as regulatory agencies that could limit the possibility of realizing the value of a certain option.

Seller’s risks

Option trading is also risky for the sellers. There are types of options that may have unlimited possibility of losses depending on the movement of the underlying stock. There are also occasions when even if there are no trading markets, sellers are obligated to sell options.

All the risks involved in options trading should be understood as something inherent to it. But any trader should not take the risks as the hook, line and sinker of the trade. As we have mentioned earlier, more risks mean better profits. So you should put into your calculation the risks but you must not forget the profit you could get from option trading.

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Option – is the right of the buyer to either buy or sell the underlying asset at a fixed price and a fixed date. At the end of the contract, the owner can exercise to either buy or sell the option at the strike price. The owner has the right to pursue the contract but he or she is not obligated to do so.

Call option – gives the owner the right to buy the underlying asset.

Put Option – gives the owner the right to sell the underlying asset.

Exercise – is the action where the owner can choose to buy (if call option) or sell (if put option) the underlying asset or, to ignore the contract. If the owner chooses to pursue the contract, he must send an exercise notice to the seller.

Expiration – is the date where the contract ends. After the expiration and the owner does not exercise his or her rights, the contract is terminated.

In-the-money – is an option with an intrinsic value. The call option is in-the-money if the underlying asset is higher than the strike price. The put option is in-the-money if the underlying asset is lower than the strike price.

Out-of-the-money – is an option with no intrinsic value. The call option is out-of-the-money if the trading price is lower than the strike price. The put option is out-of-the-money if the trading price is higher than the strike price.

Offsetting – is an act by which the owner of the option exercises his right to buy or sell the underlying asset before the end of the contract. This is done if the owner feels that the profitability of the stock has reached its peak within the date of the contract.

(Option seller) Writer – is the seller of the underlying asset or the option.

Option buyer – is the person who acquires the rights to convey the option.

Strike Price – is the price at which the underlying stock must be sold or purchased if the contract is exercised. The strike price is clearly stated in the contract. For the buyer of the option to make a profit, the strike price must be lower than the current trading price of the stock. For example, if the contract states that the strike price of a certain stock is $20 and the current trading price at the end of the contract is $25, the buyer can exercise his or her rights to pursue the contract, thus earning $5 per stock.

Option Premium – is the amount of the contract which must be paid by the buyer to the writer (the seller). The amount of the option premium is determined by several factors such as the type of the option (call or put), the strike price of the current option, the volatility of the stock, the time remaining until expiration and the price of the underlying asset to date. Taking into account these factors, the total amount of the option premium is number of option contracts, multiplied by contract multiplier. So if you are buying 1 option contract (equivalent to 100 share lots) at $2.5 per share, you must pay a total amount of $250 as the option premium (1 option contract x 100 shares x $2.5 per share = $250).

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