So I've been practicing with a virtual account to get a feel for options. I first started with $100k and beat that amount down into dirt, leaving myself with about $5k thanks to some stupid calls right before the market shat itself. Started over with $25,000. I didn't want to risk it all on one call or put so I split it into 2 halves of $12,500. I've been following Tesla pretty closely and after this recent crash I felt they were staring to slowly rebound. It was trading at $226 a share. I bought 57 call contracts at $218 at a strike price of $228 for $12,426. I then spent the remaining $12,500 on 56 put contracts at $220 per contract with a strike price of $224. Then I waited. The market opened and Tesla jumped up to around $232. I immediately jumped ship on the puts, selling for $0.25 a contract and sold my calls for $500 per contract. All in all, I made about $3,740 in 4 trades. I feel like just betting all your money on options trying to predict where the market is going is pretty much gambling, and yeah, I made way less money than if I had put all $25k into the calls, but that would incredibly risking considering how the market has been acting. I bumped up numbers for the initial capital. With $100k, I made around $15k. $500k made me $73k and $1 million made me $147k. This seems pretty easy since I am protecting myself for both the good and the bad, making money either way the market swings. If I missed something about how options work, or if something is off, please comment. I would love to know before I start playing with real money.
Submitted October 17, 2014 at 06:00PM by agreathobo http://ift.tt/1DjHGEB
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