nice tutorial, I am new at options but I think that 130 you make a profit of 200 but with -500 (initial investment) you still on the hole for 300 and not 500, am i right?
No, that's incorrect. @ 130, you down 500: Remember, in example, investor paid $500 to enter the contract, to buy the stock at 130. The stock was trading at $128, but the option was to buy it at $130 in this example. Therefore, at $130, the option has no value: it doesn't provide a profit to buy a $130 stock for $130. So, there is no profit on the option. Therefore, you're down the entire $500. I hope this helps.
thank you for clarifying this,I was looking at the 200 gain/loss which has nothing to do with the strike purchase price made at 130, once again thank you.
great tutorial...thx for discussing the basics in this.
GoddessofTravel 2 years ago
nice tutorial, I am new at options but I think that 130 you make a profit of 200 but with -500 (initial investment) you still on the hole for 300 and not 500, am i right?
BETO1BETO2 2 years ago
No, that's incorrect. @ 130, you down 500: Remember, in example, investor paid $500 to enter the contract, to buy the stock at 130. The stock was trading at $128, but the option was to buy it at $130 in this example. Therefore, at $130, the option has no value: it doesn't provide a profit to buy a $130 stock for $130. So, there is no profit on the option. Therefore, you're down the entire $500. I hope this helps.
theplacetob2b 2 years ago 3
thank you for clarifying this,I was looking at the 200 gain/loss which has nothing to do with the strike purchase price made at 130, once again thank you.
BETO1BETO2 2 years ago
I know it can be tricky at first, but you will get it! :)
FIXProtocol 2 years ago
Do you intend to trade professionally or just for yourself?
FIXProtocol 2 years ago
Hello,
The tutorial is excellent. Thank you for such a useful video. Will check other videos too.
Regards
dreamcinderalla 2 years ago