Comments on: Using Put Options: How to Grab Discounts and Instant Money Everyday http://www.investmentu.com/IUEL/2009/November/using-put-options.html Investment Advice and Investment Research with a Contrarian Point of View Fri, 19 Mar 2010 19:55:11 -0500 http://wordpress.org/?v=2.8.3 hourly 1 By: Investment U http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30530 Investment U Mon, 30 Nov 2009 17:00:41 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30530 Dave, Most brokers only "hold" a fraction of what the full shares will cost, not the full amount of what the shares will cost. This is the reason for margin requirements. Thank you, Investment U Dave,

Most brokers only “hold” a fraction of what the full shares will cost, not the full amount of what the shares will cost. This is the reason for margin requirements.

Thank you,

Investment U

]]> By: Kathleen Watkins http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30420 Kathleen Watkins Sun, 29 Nov 2009 17:49:46 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30420 I understand selling the puts for $0.65 for net $650, even though the option expired worthless. So why buy them back for $0.15? Am I missing something? Doesn't this lower your $650 net to $500? Or are you forced to close the put-sell with a put-buy? I understand selling the puts for $0.65 for net $650, even though the option expired worthless. So why buy them back for $0.15? Am I missing something? Doesn’t this lower your $650 net to $500? Or are you forced to close the put-sell with a put-buy?

]]> By: Dave R. http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30253 Dave R. Thu, 26 Nov 2009 16:07:00 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30253 Mr. Lowell, all that you wrote is correct, but you omitted stating an important factor to most small and medium sized traders including myself -- that when you sell a put option, your broker will put a "hold" in your account on the amount of money needed to purchase the underlying shares until expiration or buying back of the option. So, in your example, $7500 dollars would be tied up until the put option expired. In contrast, buying the stock at the trigger price and then selling covered calls provides more "options" to the owner, and includes the opportunity to collect dividends while holding the stock. I ask you to "flesh out" your example by adding to the description what possibilities would have existed had the trader used price triggers and covered calls. Mr. Lowell, all that you wrote is correct, but you omitted stating an important factor to most small and medium sized traders including myself — that when you sell a put option, your broker will put a “hold” in your account on the amount of money needed to purchase the underlying shares until expiration or buying back of the option. So, in your example, $7500 dollars would be tied up until the put option expired. In contrast, buying the stock at the trigger price and then selling covered calls provides more “options” to the owner, and includes the opportunity to collect dividends while holding the stock. I ask you to “flesh out” your example by adding to the description what possibilities would have existed had the trader used price triggers and covered calls.

]]> By: Rachel Sitko http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30228 Rachel Sitko Thu, 26 Nov 2009 03:36:30 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30228 If one really wanted to own GE and it traded below the put option strike price, would it not be prudent to buy the shares as in your example, for $5.72, then close out the option trade? If one really wanted to own GE and it traded below the put option strike price, would it not be prudent to buy the shares as in your example, for $5.72, then close out the option trade?

]]> By: Tom Maphet http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30222 Tom Maphet Thu, 26 Nov 2009 01:10:57 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30222 You have to have the cash available in your account to buy these stocks before you can sell the puts against it. At least in my case. So you're not just getting $650 out of thin air, it's the money you get for setting $7,500.00 aside until the option's expiration. You have to have the cash available in your account to buy these stocks before you can sell the puts against it. At least in my case. So you’re not just getting $650 out of thin air, it’s the money you get for setting $7,500.00 aside until the option’s expiration.

]]> By: Investment U http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30208 Investment U Wed, 25 Nov 2009 19:41:09 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30208 Andy, Each option contract has 100 shares, so that equates to: 0.65 per contract = 65 bucks (0.65 x 100) x 10 contracts = $650... Investment U Andy,

Each option contract has 100 shares, so that equates to:

0.65 per contract = 65 bucks (0.65 x 100) x 10 contracts = $650…

Investment U

]]> By: Andy Balance http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30207 Andy Balance Wed, 25 Nov 2009 19:36:26 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30207 $0.65 per contract multiplied by 10 contracts is NOT $650. It's only $6.50. $0.65 per contract multiplied by 10 contracts is NOT $650. It’s only $6.50.

]]> By: John B http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30203 John B Wed, 25 Nov 2009 18:58:33 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30203 This trading technique sounds simple, and it probably is... Haven't done it yet. But Marty, I think you're write! I just called a few brokerage firms. One needs to have Options Level 4 and at the very minimum $25K to $250K in their account to be able to execute these types of trades. I think it's a reminder that needs to be emphasized, especially for the little guy $ to $. This trading technique sounds simple, and it probably is… Haven’t done it yet.
But Marty, I think you’re write! I just called a few brokerage firms. One needs to have Options Level 4 and at the very minimum $25K to $250K in their account to be able to execute these types of trades. I think it’s a reminder that needs to be emphasized, especially for the little guy $ to $.

]]> By: marty http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30200 marty Wed, 25 Nov 2009 18:02:40 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30200 Hi, Yes, but it can't work for investors who aren't qualified to trade naked options. Please keep us small guys in mind when you craft your lessons. thanks for the info. Hi,

Yes, but it can’t work for investors who aren’t qualified to trade naked options. Please keep us small guys in mind when you craft your lessons.

thanks for the info.

]]> By: Using Put Options: How to Grab Discounts and Instant Money Everyday | INVESTMENT NEWS&IDEAS http://www.investmentu.com/IUEL/2009/November/using-put-options.html#comment-30197 Using Put Options: How to Grab Discounts and Instant Money Everyday | INVESTMENT NEWS&IDEAS Wed, 25 Nov 2009 16:42:47 +0000 http://www.investmentu.com/IUEL/2009/November/using-put-options-how-to-grab-discounts-and-instant-money-everyday.html#comment-30197 [...] a rest here: Using Put Options: How to Grab Discounts as good as Instant Money Everyday Share and [...] [...] a rest here: Using Put Options: How to Grab Discounts as good as Instant Money Everyday Share and [...]

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