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Forum > General Discussion > Any stock option traders?


Last Online: Nov 11, 2021 04:41:06
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Anyone here trade stock options on the side?? Just getting in to it and it is very addicting...

Last Online: Dec 8, 2021 03:31:09
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I do it with commodities but it's not really trading or speculating, it is more of a business risk management situation because I am hedging production.

Last Online: Nov 11, 2021 04:41:06
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Got ya...it's definitely a lot more risky than just trading stocks, I lost more than I would have liked, but getting back in the green now as I'm learning more and more, riding out silver today...

Last Online: Dec 8, 2021 03:31:09
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Originally posted by p_wolf1
Got ya...it's definitely a lot more risky than just trading stocks, I lost more than I would have liked, but getting back in the green now as I'm learning more and more, riding out silver today...


Huh, I will have to research the differences between various stock options and commodity call and put options because with commodities, it is significantly less risky than buying/selling the commodity and I assumed it worked the same for stock options.

Last Online: Dec 8, 2021 03:31:09
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For example, March 2021 Corn is $3.42 right now and I can purchase a call option for March 2021 @ $3.70 for around 9 cents per bushel or I can just hold the corn and take whatever the market happens to be. The reason I would buy an option is because I would sell the physical commodity for $3.42 and that would be the end of the transaction or I would sell the physical commodity for $3.42 and purchase the call option for 9 cents so I would currently have $3.33 cash for that corn with the call option. If corn never hits $3.70, I never execute the option and I lost 9 cents. If the corn does hit $3.70 or higher, I execute the option and pick up and extra $.28 per bushel minus the original cost of 9 cents.

The reason it is less risky is that it caps how much money I would lose and that is the cost of the option or 9 cents. If I did it the traditional way and held the inventory and exposed it to the market fluctuation or sold the physical inventory and simply bought March corn, it is possible that the market would go down, maybe $1 and I am out $1 per bushel, doesn't seem like much but we produce hundreds of thousands of bushels. The other side of it is that if corn would go up $1, I only get the value of the option or the $.28 so less risk=less reward.

It is funny but farming 20 years ago used to be about your ability to efficiently produce, to be successful at it now, you have to be efficient in production but it is more about being logistically efficient and mainly about managing your risk and market exposure.
Edited by Cowpoker on Jul 28, 2020 08:10:26

Last Online: Nov 11, 2021 04:41:06
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It works the same then...as I'm getting in to it, I'm trying to buy calls/puts, wait for the value to increase, then resell them...so for the stocks, I buy 1 contract at $.10/share at a 10 strike price for instance, the contract is the ability to buy 100 shares of the stock at that price. Say the price starts at $8, over the next 30-45 days, it goes up to $9.50, that call is now worth $.15/share so I sell it and make $50 without actually having to invest in the stock, but if the price goes down to $7, the contract is only worth $.05 so I lost $50 and have nothing to show for it...

I'm basically just trying to play the market without the large investment...I've had some success, but more losses, almost back to green on it though as I'm learning more and more...Just for reference, I only put $1,000 in to start trading options with, I don't do it with my actual retirement money lol

Last Online: Dec 8, 2021 03:31:09
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It's a good tool for not going all in on trading or not having capital tied up and exposed to the market.

I'm not a professional investor or brokered or licensed agent but I get the sense that you might be cutting your losses too soon but again, that is just an impression without having a clue of what options you have or have traded.

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