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Home >> Stock Forums >> Puts and Calls - Is one better than the other?

Puts and Calls - Is one better than the other?

lil dickie said: "That is to say...can you lose more money on a put than a call? :signs053:"

dumaman said: "I dont see how you could loose more money with a put or a call, since both expire worthless if the price swings the wrong way, not like a short if it swings the wrong way you loose your shirt if your not carefull. me:dazed052: thinks anyway..thats how she works.. arrrr"

drdan said: "Cool, there's questions!!!! OK it does not matter if it is a Put or a Call the most you can ever lose is 100%, now with that said it depends on how expensive the option is. What I mean by that is that options have an intrinsic value and a time value. The intrisic value is the difference between the actual price of the stock and the strike price of the option. It is what the option would be worth if the option expired today. The other part of the option price is time value which is how much time is left in the option before expiration and the volatility of the option. This is calculated out by the market makers via a bunch of calculations and their thoughts. A trader can use the Black-Scholes model to calculate out the expected time value of an option and compare. It is the time value that makes options expensive or inexpensive. If it is an expensive option meaning that the options time value is way more than what is calculated out using Black-Scholes then theoretically you are losing more money if the trade goes against you. Don't worry about using the Black-Scholes model especially in the beginning, instead just pay attention to the volatility. Just remember, you would like to buy on low volatility and sell on high volatility."

dumaman said: "well i dont have a clue what im doing but reaped 950 bucks in a day on a nov call option on peix.. :th_dblthumb2: seems like a fun game .."

Corey said: "PEIX makes my head spin. They jump 10% because they made profit for the first time ever? Oy. Maybe oil will drop and I can short the crap out of them."

tony5147 said: "Hi dumaman : Did you buy an in-the-money option on PEIX. You expected an intra-day spike in the stock?"

drdan said: "[QUOTE=dumaman]well i dont have a clue what im doing but reaped 950 bucks in a day on a nov call option on peix.. :th_dblthumb2: seems like a fun game ..[/QUOTE] Oh its fun when you make a huge gain 100+% 1000% is even more fun, but when you are on the losing side of the coin 50+% loss sucks! Intermix a few 10 to 20% gains and then a couple 50% losses and your portfolio can be in the toilet. Money managment is definitely the key to staying sound playing options."

thezster said: "[QUOTE=dumaman]well i dont have a clue what im doing but reaped 950 bucks in a day on a nov call option on peix.. :th_dblthumb2: seems like a fun game ..[/QUOTE] I've got a new hero....:th_dblthumb2:"

lil dickie said: "Thanks for the response guy! :th_dblthumb2:"

wildmandan32 said: "and just think Duma not even 6 months ago you were telling me you would never, day trade, never trade options, and thought i was insane and were all but arguing with me for trying to challenge you to challenge yourself to constantly learn new investment techniques. way to go congrats"

traderjoe said: "option is fun but be very careful money management is the key. believe me option got me go the other way and get very scary. but I 'm back and stronger."