1 Q&A from the June 26th Webinar
Thanks to the many hundreds who joined us on the 26th for Options Trading for Beginners! As promised here is the first post with some of the Q&A’s from that session!
Q: I only have about $5000 to invest. What is your recommendation for investing and trading?
A: First of all, don’t swing for the fence. You have to be patient and grow the $5000 the same as if it were $500,000. You can’t try to double your money every month. That said, you should start with a core selection of investments for the long term – index funds and bonds included. This will give you a base. You really should have around $20,000 or so before you begin to trade actively. Wihtout sufficient funds, you cannot trade enough shares to make the transactions worthwhile.
Q: If you buy an option that is in the money (ITM) by $1 and the stock price doesn’t move, is the option always worth at least $1 on expiration day?
A: Yes – an option will always be worth at least intrinsic value at expiration. But remember, you paid more than $1 for that option because you also paid for the time value. So you would lose money in the scenario you described.
Q: How can I buy puts without owning the shares?
A: You can always buy puts and calls without owning the stock. You would buy puts without buying the stock if you think the stcok price will fall. This is very similar to shorting the stock. In both cases, you profit when the stock price drops. A put option increases in value when the stock price decreases in value.
One Response to “Q&A from the June 26th Webinar”
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
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