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Option Trading Provides More Leverage

dtc 16 July, 2008 17:23 Executed Trades, Educational Materials, Options Permalink Trackbacks (0)

No, I don't think options trading is risky at all but again, I never write naked calls or naked puts.

I like to trade options because I can always know for certain what my worst case (risk) is. And since I only trade with my play money, my leisure money, my disposable cash, so even if worst case happens and I have to lose every dime, no big deal. Now granted that the stock trading is pretty much the same way in this regard, but options trading provides me more leverage with the little amount of play money I have.

So, what do I mean by leverage… let's use the order I put in last night as an example:

I put in an order to long 5 contracts of out-the-money Ciena Oct $20 call (+EUQJD) at @ $2.20, it got executed when market open @ $2.15. The call moved in-the-money during the day, so I trade it off (not exercise it) @ $3.10 and had a hadsome realized gain of $525, a 49% gain! That's what I mean by leverage.

Ciena Oct $20 call (+EUQJD)

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    Posted by ann — 16 Jul 2009, 23:10

  2. thnx for the insights.

    Posted by binary options — 26 Jul 2009, 10:25

  3. You made a great 1-day trade there. It would be great to do that every day. But how do you pick your trades?

    Posted by bill — 04 Nov 2009, 15:57


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