Money and Finance
A lot of people hear the word options with respect to stocks and think it's a high risk venture. While options are for everyone I feel they definitely have a place in a portfolio. I prefer selling put options to call options which I will explain why in a future post.
Put options, in a nutshell, are a contract between two parties where they agree to exchange the underlying stock at a specified price known as the strike price by a certain date. The buyer of the put has the right but not the obligation to sell the underlying by the expiration date at the strike price, where the seller of the put has the obligation to purchase the underlying if the option is exercised. The buyer has to pay the seller of the put option the premium for the right to sell the shares. Option contracts for stocks are based off 100 share lots. Therefore 1 contract is really referring to 100 shares.
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- The Best Of Both Worlds: Put Options
Obviously the most important part about investing is finding the truly great companies that have the ability to grow profits and dividends for decades on end. Once you identify those companies through a qualitative analysis the next step I like to take...
- Expiration Friday
The third Friday of July came and went meaning it's option expiration time. Three different options expired on Friday with my 2 call options on Halliburton (HAL) being in the money and my put option on Clorox (CLX) expiring out of the money. So...
- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- Option Buyback?
Back in the beginning of February I sold a call option for HAL with a strike price of $42 for $1.60. The option expires on July 20th. Based on the sale if the option expired I would have earned $151.97 over about 5 months. This would have been a total...
- Recent Transactions
Today I sold 2 option contracts in an attempt to add some more income. The first contract that I sold was the BAC Jan 18 2014 $7 Put for $1.73. If the option gets exercised then my cost basis for this transaction will be $5.27. If the option expires then...
Money and Finance
Put Options Explained
A lot of people hear the word options with respect to stocks and think it's a high risk venture. While options are for everyone I feel they definitely have a place in a portfolio. I prefer selling put options to call options which I will explain why in a future post.
Put options, in a nutshell, are a contract between two parties where they agree to exchange the underlying stock at a specified price known as the strike price by a certain date. The buyer of the put has the right but not the obligation to sell the underlying by the expiration date at the strike price, where the seller of the put has the obligation to purchase the underlying if the option is exercised. The buyer has to pay the seller of the put option the premium for the right to sell the shares. Option contracts for stocks are based off 100 share lots. Therefore 1 contract is really referring to 100 shares.
Read more »
- The Best Of Both Worlds: Put Options
Obviously the most important part about investing is finding the truly great companies that have the ability to grow profits and dividends for decades on end. Once you identify those companies through a qualitative analysis the next step I like to take...
- Expiration Friday
The third Friday of July came and went meaning it's option expiration time. Three different options expired on Friday with my 2 call options on Halliburton (HAL) being in the money and my put option on Clorox (CLX) expiring out of the money. So...
- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- Option Buyback?
Back in the beginning of February I sold a call option for HAL with a strike price of $42 for $1.60. The option expires on July 20th. Based on the sale if the option expired I would have earned $151.97 over about 5 months. This would have been a total...
- Recent Transactions
Today I sold 2 option contracts in an attempt to add some more income. The first contract that I sold was the BAC Jan 18 2014 $7 Put for $1.73. If the option gets exercised then my cost basis for this transaction will be $5.27. If the option expires then...