Imagine you think a stock, XYZ Corp, which is currently priced at $50, will go down in value. 1. Buying a Put Option: - You buy a put option that lets you sell the stock for $45. - This option costs $2 per share, so for 100 shares, it costs you $200 in total. 2. What Happens Next: - If the Stock Price Falls: - If the stock price drops to $40, you can use your option to sell it for $45. - You make a profit because you sold it for more than it’s worth. You would earn $300 after covering the cost of the option. - If the Stock Price Stays the Same or Goes Up: - If the stock stays at $50 or goes higher, you won’t use the option. - You would lose the $200 you paid for the option. 3. Key Point: - Buying put options allows you to make money if the stock price goes down, but your biggest loss is the $200 you spent on the option.
@ thank you for the quick reply. In terms of real value and time value For ex: xyz current price 50$ 52 C premium 1$ ; real value here is 0 : time value: 1 49 C premium: 1.5$: real value here is 1$ time value; 0.5 If I wanted to buy puts vice versa If current price is 50$ And I wanted the 52P would the real value be 2 or is it 0?
Great question! Let's break it down: 1. Current Price of XYZ Stock: $50 2. Call Options: - For the $52 Call Option: - The stock price ($50) is less than the strike price ($52), so the real value is $0. The time value is $1 (the total premium). - For the $49 Call Option: - The stock price ($50) is more than the strike price ($49), so the real value is $1 (because you can buy the stock for $49 and sell it for $50). The time value is $0.50. 3. Put Options: - For the $52 Put Option: - The stock price ($50) is less than the strike price ($52), so the real value is $2 (because you can sell the stock for $52 but it's only worth $50). The time value would depend on the premium you pay for the option. So, if you buy the $52 Put Option, the real value would be $2. I hope that helps! Let me know if you have more questions!
In options trading, you can leverage your investment to control a larger position with less money. The amount of leverage depends on your broker and the type of options you trade. Leverage can magnify both gains and losses, so it's crucial to be aware of the risks involved. Contact your broker for specific details on leverage limits in options trading.
Yes, definitely! Remember, it is very important to position size appropriately, find the RIGHT trades, and have a mentor or community you can trust. I, along with the Rockwell Trading team, use a custom-built software called PXO which helps us filter and sort through the right trades: www.rockwelltrading.com/products/10-44-powerx-optimizer/
Great and simplest explanation 👍
Nice editing and lecture. I think my knowledge level needs to be raised up to meet this level of discourse and speed.
Your bubble is block part of screen. I could see where you were getting the $3 from
Yeah same issue
hi Markus, do u still offer the 3 day online workshop on trading option where u trade with the attendees at the end of the course? thanks
Hi! You can check the details here www.rockwelltrading.com/products/theta-kings/
@@rockwelltradingservices Not at the same price of 149USD?
If this is an example for buy calls
What about buy puts ?
Imagine you think a stock, XYZ Corp, which is currently priced at $50, will go down in value.
1. Buying a Put Option:
- You buy a put option that lets you sell the stock for $45.
- This option costs $2 per share, so for 100 shares, it costs you $200 in total.
2. What Happens Next:
- If the Stock Price Falls:
- If the stock price drops to $40, you can use your option to sell it for $45.
- You make a profit because you sold it for more than it’s worth. You would earn $300 after covering the cost of the option.
- If the Stock Price Stays the Same or Goes Up:
- If the stock stays at $50 or goes higher, you won’t use the option.
- You would lose the $200 you paid for the option.
3. Key Point:
- Buying put options allows you to make money if the stock price goes down, but your biggest loss is the $200 you spent on the option.
@ thank you for the quick reply.
In terms of real value and time value
For ex: xyz current price 50$
52 C premium 1$ ; real value here is 0 : time value: 1
49 C premium: 1.5$: real value here is 1$ time value; 0.5
If I wanted to buy puts vice versa
If current price is 50$ And I wanted the 52P would the real value be 2 or is it 0?
Great question!
Let's break it down:
1. Current Price of XYZ Stock: $50
2. Call Options:
- For the $52 Call Option:
- The stock price ($50) is less than the strike price ($52), so the real value is $0. The time value is $1 (the total premium).
- For the $49 Call Option:
- The stock price ($50) is more than the strike price ($49), so the real value is $1 (because you can buy the stock for $49 and sell it for $50). The time value is $0.50.
3. Put Options:
- For the $52 Put Option:
- The stock price ($50) is less than the strike price ($52), so the real value is $2 (because you can sell the stock for $52 but it's only worth $50). The time value would depend on the premium you pay for the option.
So, if you buy the $52 Put Option, the real value would be $2.
I hope that helps! Let me know if you have more questions!
hello sir how much maximum leverage I will get in option trading
In options trading, you can leverage your investment to control a larger position with less money. The amount of leverage depends on your broker and the type of options you trade. Leverage can magnify both gains and losses, so it's crucial to be aware of the risks involved. Contact your broker for specific details on leverage limits in options trading.
@@rockwelltradingservices can I allowed to rollover my option position in stock or not in option contract
Good Good Good
:) Thank you for watching!
Can someone trade options for reliable and safe income and not losing one's capital for life?
Yes, definitely! Remember, it is very important to position size appropriately, find the RIGHT trades, and have a mentor or community you can trust. I, along with the Rockwell Trading team, use a custom-built software called PXO which helps us filter and sort through the right trades: www.rockwelltrading.com/products/10-44-powerx-optimizer/
Confused
What confuses you? I might be able to clarify. :)
You made it more confusing-!!!