I’m Thinking About Buying A Call On Gold


Manage episode 152573497 series 1063725
על ידי Joshua Belanger התגלה על ידי Player FM והקהילה שלנו - זכויות היוצרים שמורות למפרסם, לא ל-Player FM, והשמע מוזרם ישירות מהשרתים שלכם. הירשמו כדי לעקוב אחר עדכונים ב-Player FM, או הדביקו את כתובת העדכונים באפליקציות פודקאסט אחרות.
That was a question Ronnie wrote me over the weekend. He thinks that Gold ETF (GLD) will run higher into the end of the July. That's great, but who knows. The reason why I am telling you this is so you avoid this very costly mistake most make with trading options. Not only do sell offs in the market like this give people a good old slap in the face, but it also exposes the self-proclaimed experts in the space. I saw a proclaimed trading expert with several hundred people paying for his trade ideas recommend buying calls in a stock today on Twitter. I sighed and shook my head because I know he's leading investors down the wrong path. When you buy a call, you need to be right on time, direction and also volatility. That is the trade off with using options Vs. underlying. If you want to be successful with options, you must understand volatility and how it affects options pricing. With volatility higher across the market, option premiums are more expensive. If you've read my book or past emails, you know options pricing equals implied move. Let's assume you were right on direction and gold does go higher. But if volatility goes lower the value of the option contract will decrease. It's very likely that the decrease of volatility and time decay will outpace the move if you were correct. In this situation, it's very unlikely the option contract makes money. As I mentioned, this is a common mistake most make because they don't understand how options work and how to use them correctly. Every situation is different, and there are a few things you must always look at to put on a trade with the best probability of success. If I were bullish on gold (GLD) ETF, I wouldn't buy a call or call spread. If I only had to use options, I would sell a put spread. If I had to own the stock, I would sell calls against it for a covered write. How do you manage profits or losses? You can learn that very quickly because I discuss how to do that in the book I wrote called: http://www.FearlessInvestingWithOptions.com To your wealth, freedom and options! Joshua Belanger

228 פרקים