Quote:
Originally posted by lil2rich4u2
understood
I think i am going to buy a contract i have been watching and study it for a day or so, see how it acts.
the article i just read was very well written and i understood a lot, the last chapter about pricing the option was very confusing, but i will work on it a bit.
im in one of those "trust me this will be a $20 stock before you know it" situations, and id rather buy a few cheap contracts than dump lots into the stock hoping for the best.
the only problem i see is, i just read in that article that the price increase or decrease expectancy could have been forcasted and written into the contract premium, hence illiminating my profit if it moves as expected.
ill take a shot, im all about hands on and big risk lol
thanks so much for the info guys, really helped out!
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very true
if the market expects the stock price to be a certain price at expiry, then this would have already been factored into the option premium.
Try checking the historical volatility & implied volatility figures - these can provide information on market expectation