# Option starter



## stargazer (13 November 2007)

Hi all

There may be something on this but i can't find it, so i need to ask.  

What do you call this type of trade.  Looking up some information on options and there is so many ways Long/short/bull long etc

*What i am considering to gain some leverage on a blue chip stock*
Say i see a company XYZ and its share price is say $60 per share.  I think the price will increase, over the next month or so.

If i wanted to buy say 1000 it would cost me $60,000 which i dont have.

So i would look to an Option to buy at a strike price.  Say the option cost is $2  so the option of 1000 ( 1 contract) cost me $2000

*What do you call this type of trade.

Where do i get the info for it.(Codes and conduct the trade)*

*Do must online broker like etrade commsec do this.*

Now if i get it wrong and the price of the share goes down to say $56 what happens? 

what are my options?  

look forward to a reply

Cheers
SG


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## shaunm (13 November 2007)

http://www.asx.com.au/asx/markets/searchOptionPrices.do

I believe this is a "put" option. You believe the price will increase and you agree to a strike price which you believe will be below the actual price at the end of the contract. You will recieve a premium and if the final price is at or below your strike price you will be excercised and have to buy the stock.
Once you have the stock you can start writing "calls" which is the opposite of what you have just done.

You will need to open an options trading account with a broker.


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## potato (13 November 2007)

Well when it comes to options u have a few options. Seems like u want to go long. You can buy a call option which is ur simplest trade, or u could sell a put option. those are your two basic trades, there are combinations too. I reckon buy a call is what u want to do, how ever options prices vary depending on how much in the money, out the money or at the money they are, also time to expiry and volitility. So when you are asking how much will the option be worth if the share prices goes down, you dont really know until you know the specifics. Selling a put by itself requires collateral and if it goes agianst you , your risk could be big, so its a pretty dangerous trade if you dont know what you are doing. I trade options with comsec. They give u a trading platform called professional trader and all the info is there. If you go to the derivatives section of this forum, you can find good information there. Hope that helps


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## bvbfan (14 November 2007)

Basically

If you think the share price of the stock is going to be above a certain price, think of it as the exercise price you want to call the stock from the person holding it, so you buy a call option.

If however you think the share price will be below that price you want to put the stock to someone else, so you buy a put option.


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## pickle1 (14 November 2007)

coo'ee cobber. it's off to the library for you. asx has compulsory rule .you must read there book prioir trading options. there's about 10 good books available. check internet.various searchs',google."option trading"one of my searchs found   .philstockworld.com about as good asyou get.asx.brokers at there officlal site are all listed happy reading....."whilst swimming with sharks don't feed them your penguin.."


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## wayneL (14 November 2007)

pickle1 said:


> coo'ee cobber. it's off to the library for you. asx has compulsory rule .you must read there book prioir trading options. there's about 10 good books available. check internet.various searchs',google."option trading"one of my searchs found   .philstockworld.com about as good asyou get.asx.brokers at there officlal site are all listed happy reading....."whilst swimming with sharks don't feed them your penguin.."



Good advice.

Also this link ==> http://888options.com/classes/ is good for some basics.


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## stargazer (14 November 2007)

Hi all

Thanks all for your input and will follow some of the links and suggestions.  I am aware its a beast that you need to know.

Thanks again
SG


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