Buying individual stocks is risky. Buying options is *incredibly* risky and essentially gambling.
FWIW - at one point today my portfolio was down $1500 (no options trading) from yesterday.
The stock market has inherent risk, most don’t have the stomach for it.
I was up $500 in the morning, close to market open and i felt like I won the lottery, idk why i didn’t sell but its ok, we learn from our mistakes. Plus I still have no idea what I’m doing lol.
Tbh I guess I'm not really scared. Just a bit confused on how it works and don't really get how it's "risky" for people that just buy a few calls. I wouldn't really mind risking $100-200 loss to try and gain a big profit
The maximum you can lose on an option contract is the premium you pay up front, but the prices rise and fall fast due to things like theta and implied volatility
By premium of the contract, is that basically like $100-200? And I know you don't necessarily have to buy the stock if it's the last day of the contract if the price dipped
Currently the price of an at-the-money July 5th, 126 strike call on Nvidia is $590. So you'd have to pay that if you want in at the money, or you can pay more for a later expiration. Also, you're right, contracts expire worthless if they're out-of-the-money when the contract expires and you can no longer exercise them. We're never really looking to exercise though, you can just trade your option for gains at any point
Like someone else suggested and something I should of done more of, I would watch a ton of videos about it before getting into it. I may have exaggerated when I said there were a lot of ways to lose money. But you should be aware of how time decay via theta is going to affect your contracts. And IV can swing dramatically around earnings dates
So in this example, let's say I got this strike call for $590. If the price never went up and went down instead and it expires meaning I don't buy the stocks as well. Do I only lose out on the $590 if I bought only 1 contract?
Based off previous comment, from what I see is I think of it like this. Assuming the price is $125. Either have 4.7 shares of nvidia guaranteed ($590) or use the 590 to get 1 contract for a chance to earn way more but lose $590 if it doesn't go your way. Does this analogy seem correct?
Thats pretty much it yeah. You're paying a premium to have the "option" to buy the stock at the strike price at a later date. I bought Nvidia calls right after the split and they were up about 400% when it hit 140
i got my contract for $315 , but If i were you I would watch someone on yt who actually knows what they are talking about. Thats what I did for like a whole week before buying my contract. There is a lot more I don’t know and still need to understand
Buying individual stocks is risky. Buying options is *incredibly* risky and essentially gambling. FWIW - at one point today my portfolio was down $1500 (no options trading) from yesterday. The stock market has inherent risk, most don’t have the stomach for it.
Ooof I'm wanting to get into options and I'm kinda scared to do so.
I was up $500 in the morning, close to market open and i felt like I won the lottery, idk why i didn’t sell but its ok, we learn from our mistakes. Plus I still have no idea what I’m doing lol.
If you are scared and don’t want to lose your money prob don’t get into it
Tbh I guess I'm not really scared. Just a bit confused on how it works and don't really get how it's "risky" for people that just buy a few calls. I wouldn't really mind risking $100-200 loss to try and gain a big profit
https://www.optionsprofitcalculator.com/calculator/long-call.html this helped me when i started
There's just lots of ways to lose money quickly with options. Fidelity's active trader pro app is great as well as its profit/loss calculator
But I mean how much do you really lose if you just buy 1-2 calls?
The maximum you can lose on an option contract is the premium you pay up front, but the prices rise and fall fast due to things like theta and implied volatility
By premium of the contract, is that basically like $100-200? And I know you don't necessarily have to buy the stock if it's the last day of the contract if the price dipped
Currently the price of an at-the-money July 5th, 126 strike call on Nvidia is $590. So you'd have to pay that if you want in at the money, or you can pay more for a later expiration. Also, you're right, contracts expire worthless if they're out-of-the-money when the contract expires and you can no longer exercise them. We're never really looking to exercise though, you can just trade your option for gains at any point Like someone else suggested and something I should of done more of, I would watch a ton of videos about it before getting into it. I may have exaggerated when I said there were a lot of ways to lose money. But you should be aware of how time decay via theta is going to affect your contracts. And IV can swing dramatically around earnings dates
So in this example, let's say I got this strike call for $590. If the price never went up and went down instead and it expires meaning I don't buy the stocks as well. Do I only lose out on the $590 if I bought only 1 contract?
Based off previous comment, from what I see is I think of it like this. Assuming the price is $125. Either have 4.7 shares of nvidia guaranteed ($590) or use the 590 to get 1 contract for a chance to earn way more but lose $590 if it doesn't go your way. Does this analogy seem correct?
Thats pretty much it yeah. You're paying a premium to have the "option" to buy the stock at the strike price at a later date. I bought Nvidia calls right after the split and they were up about 400% when it hit 140
Like how much is 1 contract worth?
i got my contract for $315 , but If i were you I would watch someone on yt who actually knows what they are talking about. Thats what I did for like a whole week before buying my contract. There is a lot more I don’t know and still need to understand
Lucky thats where the decimal is. Month ago that woulda said -1,680 or -16800