<p>take that back on buying a put - I’m tired today.</p>
<p>When I sell a put, Schwab makes me set aside enough cash to buy the stock. They call it “cash secured put selling.” I don’t even want a higher level of approval that would let me sell naked calls or unsecured puts. </p>
<p>I totally agree with this:
</p>
<p>Njres…Hmmm…</p>
<p>Interactive broker charges less than Schwab…I was thinking of switching…especially with all the tax reporting problems…</p>
<p>How much do you pay for a futures contract?</p>
<p>Obviously …you like the tradestation’s interface.</p>
<p>How much does tradestation charge for options?</p>
<p>One thing about Schwab…because they sell their orderflow…occasionally…a trader gets better fills than the screen shows…if that trader takes a bid or offer…</p>
<p>So now that I think of it…my commission cost on the 100 put sell was probably less thsn half the quoted commission prices…because I did get better fills.</p>
<p>In a stock, I stand corrected. You can lose ALOT, stock could go to zero. Naked Index Puts have wiped serious people out. I question any Broker/Dealer that would approve of hundreds or thousands of options contracts ( each representing 100 shares). Especially the do it yourself online B/D’s. You should have millions in your account to get approval for that - and if you do - you are not interested in speculating in Options. That is Vegas style investing. I have seen stocks halted trading, markets closed for days ( 9/11), flash trading, things you cannot plan for. Sept. 2008?!
Again, selling naked Options is not investing. It’s gambling. Please post responsibly.</p>
<p>It is gambling…</p>
<p>I think the thread title says that gambling is included in this thread.</p>
<p>I have seen many traders wiped out.</p>
<p>Maybe, I better stop talking about these trades. :)</p>
<p>"Again, selling naked Options is not investing. It’s gambling. Please post responsibly. "</p>
<p>??? - only calls and most people do not have approval to sell any naked options</p>
<p>I have no idea what you’re all talking about.</p>
<p>Which part?</p>
<p>:)</p>
<p>I did another goofy trade today…I lost maybe $100… </p>
<p>I better not say what is was. :)</p>
<p>The interesting thing about options is you can trade calls and end up with a put position or trade puts and end up with a call position. :)</p>
<p>For example…if somebody buys 200 shares of Aapl and sells 2 may 630 calls against it…that person has sold 2 may 630 puts. It just doesn’t say that on the confirms. :)</p>
<p>Selling Covered calls is the same as selling uncovered puts…Or selling puts naked. </p>
<p>Brokerage firms have gotten in trouble because they didn’t understand this. It wasn’t that long ago that brokerage firms didn’t allow naked put selling… But they did allow covered writes. :)</p>
<p>Where I have seen the public get in trouble is when they misunderstood
the risk.</p>
<p>Somebody might think I can handle the downside of owning 500 shares of a stock. Hey if I sell covered calls…I can handle more downside…
I can buy more shares…maybe…instead of buying 500 shares…I buy 1,000 shares and sell 10 calls.</p>
<p>Well…just make a profit and loss chart with different share prices and it becomes obvious that the pnl for covered writes are very different than owning fewer shares…</p>
<p>Anyway…I have seen so many people blow up on this…</p>
<p>The stock gets crushed and then it is ugly…</p>
<p>I sold Qualcomm April calls that I had bought a while ago figuring it would go down based on my company’s reduction in backlog which means Qualcomm would and will have a harder time getting chips.</p>
<p>But if Qcom wants more chips why wouldn’t you supply them?</p>
<p>Do you need some minimum amount of orders?</p>
<p>I am not getting this…</p>
<p>If backlogs are reduced…I would think it would be easier to get product.</p>
<p>dstark,
So, how would you recommend hedging a long stock position in shares, then? You know-- the basic attempt to protect from a decline in the stock price without having to actually sell the shares?
Some readers of this thread do need a little guidance!</p>
<p>"But if Qcom wants more chips why wouldn’t you supply them?</p>
<p>Do you need some minimum amount of orders?</p>
<p>I am not getting this… "</p>
<p>We don’t make chips, we sell the equipment that is necessary to make chips. Our backlog is being reduced because our customers: TSMC, Samsung, IBM, Intel etc. are not ordering new equipment to make more chips. We own > 70% of the market for our product. Since they are ordering less of our product, they do not see as heavy a demand for chips this year. As you’re aware, Samsung supplies the chips that go into the iphone and their own products.</p>
<p>Those expecting to get the guidance here really need the guidance!</p>
<p>There is no right answer…you can’t get a perfect hedge and still participate on the upside…</p>
<p>Hedges cost money…if you buy puts…the premium costs you money…if you sell calls…you give up upside …</p>
<p>You can use spreads buying one option against another…but the commission costs can kill…and things can get complicated…</p>
<p>I am not saying never to hedge…</p>
<p>You just have to figure out where you are comfortable…what kind of risk you want to take…</p>
<p>I used to use charts…</p>
<p>What happens to my portfolio if the stocks in it drop 10%… 20%…etc…</p>
<p>I would have charts of individual stocks too…</p>
<p>If I didn’t like the risk…i would cut my positions…or hedge…but I knew for taking on less risk…likely there was going to be less reward.</p>
<p>I am sure this answer isn’t very satisfying.</p>
<p>"So, how would you recommend hedging a long stock position in shares, then? You know-- the basic attempt to protect from a decline in the stock price without having to actually sell the shares? "</p>
<p>How about buying puts?</p>
<p>Doct…that doesn’t sound good…The tech news…</p>
<p>Stocks go up and they go down, using puts strategically while reducing the upside, limit the downside. There are no free lunches. You folks buy house insurance to protect your assets - this is the same. One big advantage of buying puts if done correctly, is that it reduces the volatility in your positions over time. There is a big difference in return if something goes up and down 20% vs up and down 50%.</p>
<p>Performersmom…I guess my real guidance is don’t trade or invest in anything you don’t understand.</p>
<p>That goes for everybody…including myself. :)</p>