QUOTE(Davidtcf @ Apr 5 2022, 03:37 PM)
but if prediction goes wrong.. or some unforeseen thing happens.. can end up lose money also. And the amount lost much greater than buying stocks.
Actually no. Maximum you lose is the amount you paid for 1 contract. That's it. Nothing more or nothing less.
Buying 1 contract = 100 shares but = lesser value than buying 100 shares outirght. Don't believe me go and do a simple Google of buying saying say 100 Tesla shares Vs buying 1 deep in the money call options for Tesla. See the difference?
If the options is deep in the money, you can exercise the options you bought or 100 shares. Those 100 shares is worth something provided the company is still around.
As long as any options is deep in the money it will auto exercise upon expiry date.
You will lose money only if the company goes to zero. Buying 1 contract will make you lose less money Vs buying 100 shares outright if the company goes to zero.
But if your are selling naked calls the risk can be a lot if you domt have the collateral to back it up.
I am talking about buying deep in the money calls here.
Another strategy you can follow is chicken genius strategy. Sell at the money put 1 month out. On expiry date, just buy back the put to close it. But he only does it on Tesla.
If you know what you are doing with options, it's next best thing since sliced bread. I have been making usd400-450/week just by selling options. Not much but better than nothing. The USD400-450/week really help to refill my money chest faster than my salary or dividends. That's why I don't do dividend investing anymore. In fact this week those USD400-450/week paid for my 10 shares of Starbucks aka I am getting 10 free shares of Starbucks
This post has been edited by Ramjade: Apr 5 2022, 04:35 PM