We bought our first stock option ever.
My husband was thinking about if for a while, and with my support he finally decided to give it a try.
It is risky, of course. We could make some money, we could loose the entire amount.
To break even Apple has to go above $403 by third week of January.
My husband is an apple enthusiast and he is constantly reading articles about what is going on with this company, so he has done some research. And I don't want him to feel we can never take a chance with anything -- he is extremely responsible with money and does not do such things likely, so I wanted him to have a chance. Plus, I believe there is a very good chance this can work.
So there, we did it.
We just placed a $3,300 bet. Can't believe we did it!
August 22nd, 2011 at 05:29 pm
August 23rd, 2011 at 12:24 am 1314055488
September 7th, 2011 at 03:56 am 1315364202
September 7th, 2011 at 08:33 pm 1315424029
Basically, you just pay a fee to buy an option to buy stock at a certain price. We were betting on the stock going up(most people bet on a stock going down). So if it goes up past the amount we called plus the fee that we paid to buy it, we make money. If not, we loose money.
But the option is influenced not only by the stock price, but also by people's expectation that the stock will rize or decline. That's because you don't have to exersize the option, you can just re-sell it to someone else. So you could make money even if the stock price did not reach that point.