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Michael E
Hello, I am new here and was wondering if I could get in on the past Options trades in the portfolio or would it be wise to wait for new trades due to time decay?
You can execute past trades provided they are still within their price limits and have more than a month until expiration.
Michael E
Thank you very much!! By the way, I’m loving all of my subscriptions here on Investingdaily, you guys are the most informative and useful site out there, I would recommend you to anyone!
Question on some trades that I have not gotten to until 1-2 days later. When I entered the limit order, it was outside the bid/ask range so I have two orders that have not filled (XRX, M). The bid/ask range at this point is well below what you recommend the minimum limit order should be. Should I leave it as is? Thanks
Jim Pearce
We do not recommend opening an options trade once there is less than a month before expiration due to the rate at which time premium begins to erode during the final weeks. In those cases, the best thing to do is just let that trade pass and move on the next one.
Why do you have to buy the stocks when your in the money on a put trade? That’s why Firm reserves your funds. But, Firm doesn’t reserve your funds when your In the money on a call trade. Can you buy to open on a Put option trade?
Jim Pearce
A put option gains value as the price of the underlying stock drops (the opposite of a call option, which gain values when the price of the underlying stock rises). Thus, a put option is “in-the-money” when the price of the underlying stock is less than the strike price. Since we are selling puts (and therefore not the owner of that option), we would prefer that they expire “out-of-the-money” meaning the price of the underlying stock is higher than the strike price at expiration and therefore the stock cannot be put to us by the owner of that option.
You can buy to open a put option trade, but that means you think the price of the underlying stock is going to go down. Since this is an income service, we do not buy put or call options since that requires an outlay of capital at the onset. Instead, we sell puts and calls so we can collect the option premium up front.
Stock Talk
Michael E
Hello, I am new here and was wondering if I could get in on the past Options trades in the portfolio or would it be wise to wait for new trades due to time decay?
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Jim Pearce
You can execute past trades provided they are still within their price limits and have more than a month until expiration.
Michael E
Thank you very much!! By the way, I’m loving all of my subscriptions here on Investingdaily, you guys are the most informative and useful site out there, I would recommend you to anyone!
You must be logged in to post to Stock Talk OR create an account
You must be logged in to post to Stock Talk OR create an account
SLHLLC
Question on some trades that I have not gotten to until 1-2 days later. When I entered the limit order, it was outside the bid/ask range so I have two orders that have not filled (XRX, M). The bid/ask range at this point is well below what you recommend the minimum limit order should be. Should I leave it as is? Thanks
Jim Pearce
We do not recommend opening an options trade once there is less than a month before expiration due to the rate at which time premium begins to erode during the final weeks. In those cases, the best thing to do is just let that trade pass and move on the next one.
You must be logged in to post to Stock Talk OR create an account
You must be logged in to post to Stock Talk OR create an account
Tonya Sharps
Why do you have to buy the stocks when your in the money on a put trade? That’s why Firm reserves your funds. But, Firm doesn’t reserve your funds when your In the money on a call trade. Can you buy to open on a Put option trade?
Jim Pearce
A put option gains value as the price of the underlying stock drops (the opposite of a call option, which gain values when the price of the underlying stock rises). Thus, a put option is “in-the-money” when the price of the underlying stock is less than the strike price. Since we are selling puts (and therefore not the owner of that option), we would prefer that they expire “out-of-the-money” meaning the price of the underlying stock is higher than the strike price at expiration and therefore the stock cannot be put to us by the owner of that option.
You can buy to open a put option trade, but that means you think the price of the underlying stock is going to go down. Since this is an income service, we do not buy put or call options since that requires an outlay of capital at the onset. Instead, we sell puts and calls so we can collect the option premium up front.
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You must be logged in to post to Stock Talk OR create an account
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