Re:Tencent buys 5% of Tesla
by reverend_gonzo on Tuesday March 28, 2017 @01:56PM
(#13978906)
This is wrong. You should not be trading options if you only have a directional view of a stock, as you will get eaten alive. Options pricing involves much more than just the underlying stock. Most importantly, as another poster said, there is implied volatility. There is also time risk and interest rate risk priced into the option.
With options, you could be right on direction, and still lose money.
If your strategy is to hold them in order to exercise them you do not need to worry about their pricing.
Re:Tencent buys 5% of Tesla
by samfisher83 on Tuesday March 28, 2017 @12:08PM
(#13977796)
With put option you pay a big premium for the right for someone else to take that risk. If the company has a high volatility like Tesla you will pay a big premium to buy that option.
Re:Tencent buys 5% of Tesla
by FeepingCreature on Tuesday March 28, 2017 @01:57PM
(#13978927)
I wish people could buy something like an "implied short", which would basically be an index minus Tesla.
Re:Tencent buys 5% of Tesla
by Ericson2314 on Tuesday March 28, 2017 @02:21PM
(#13979197)
In general, I wish there were safer ways to short.
Re:Tencent buys 5% of Tesla
by paul_milovanov on Tuesday March 28, 2017 @01:13PM
(#13978451)
Upside insurance isn't free. There's no free lunch.
Shorting generally should only be for companies whose solvency is in doubt.