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Unconstitutional Patriot
Join Date: Apr 2000
Location: volunteer state
Posts: 5,620
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Anybody trade stock options?
I have never bought options before, but I would like to buy puts on Toll Brothers stock.
As I understand, if I buy one contract, I stand to only lose the cost of the contract + trading fees. For example, if a Dec 05 $40 contract is $2.70, and trading fees are $7.95 per trade, the maximum loss I can sustain is $7.95 + $2.70, correct? Thanks in advance. jurgen |
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11-02-2005, 11:39 AM
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Join Date: Jun 1999
Posts: 7,128
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Yes, the max you can lose is everything you put in, including commisions, so long as you are only buying puts or calls.
__________________
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11-02-2005, 01:10 PM
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Location: SF Bay Area
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I don't have my trading screen up but if the Dec 40 put is $2.7 then that'd be $270 (100 shares = 1 contract for the most part) at market price plus commission.
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11-02-2005, 01:41 PM
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Re: Anybody trade stock options?
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11-02-2005, 01:51 PM
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Unconstitutional Patriot
Join Date: Apr 2000
Location: volunteer state
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Well, I will admit this is a speculative play. I believe we have seen the peak in housing and in housing stocks. Despite beating the earnings estimate last quarter, their stock still dropped. Toll is known for their luxury homes, and luxury homes take the first hit when the market turns down.
The only question now is whether I will go with Dec 05 or Jan 06. I think Jan 06 for an extra $0.70 is good for the extra margin. I may need the extra time to make the play work. To me, the housing market has dark clouds on the horizon. Those clouds might dissipate some, but I know there is no blue sky behind. Heck it's only $300. |
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11-02-2005, 03:19 PM
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Location: SF Bay Area
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Hey, I hope you played a put. Check out their stock now.
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11-08-2005, 07:28 AM
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Location: Delaplane, virginia
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Nice call!
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11-08-2005, 10:41 AM
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Join Date: Dec 2002
Location: Worcester County, MA
Posts: 853
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No PUTS , not calls.
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11-08-2005, 11:25 AM
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Unconstitutional Patriot
Join Date: Apr 2000
Location: volunteer state
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Sometimes, it's better to be lucky than good.
 Jan06 Puts, Strike of $40 were $3.40 Today, at last trade, the contract was $6.50 I think many were looking for the last gasp of the housing index, and I think today was the mark. |
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11-08-2005, 12:42 PM
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Great pick! So what are you gonna buy with the proceeds?
Yeah, I was watching Bloomberg TV this morning and one of the guests said that the beating Toll Brothers took was a sure sign of the housing market slowing. Not crashing but slowing. It will also trickle down to other consumer goods purchases since a lot of folks have been using their home equity as ATM machines. |
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11-08-2005, 02:23 PM
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Unconstitutional Patriot
Join Date: Apr 2000
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Quote:
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11-08-2005, 02:57 PM
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