What's a good way to learn the very absolute basics of options trading?
Right now at the entry level I'm clear to sell puts and do covered calls, but I feel confused and honestly pretty scared by some of the information I see when going through the process of a trade. Like writing a single put tells me it will cost $8,000 in buying power, like what the fuck does that even mean.
I'm ready to let my savings work for me - but where do I start making sense of all this?
>>1335640
Get your CFA. It's peanuts compared to college, teaches you everything you need to know, and you can leverage it to get a job (at least in NY)
>>1335640
your brokerage house reserves your buying power in case your short put gets exercised you'll have to buy 8000 worth of stock. Make sure your short position is going to be out of the money as you approach expiration or you'll be exercise cucked.
There are arbitrage seeking fuckers who can somehow find all in the money trades about to expire and grab em to exercise I don't how the fuck they do it - it might be the brokerage house itself - so always roll positions at least 1 week out they say on TastyTrade and you should be fine
>>1335701
So just gonna paraphrase what you said here to make sure I understand it.
If I sold an apple put at 90, my brokerage house would hold onto $8000 in case the share price drops down to 90 because I'd now own those stocks. And when that happens, that means my put was exercised, and I lose those $8000 I put on the line?
Assuming I'm right about what you just said, my issue is that I'm just looking at too expensive stock. Only got $3000 to cunt around with.
I wish tdameritrade would approve me for vertical trades. Looking at shit without defined risk scares the fuck out of me.
>>1335736
1 short put option ties to 100 shares btw
I dont know what trade you were doing that showed 8000 buying power reduction but if you get exercised on a short put, you don't lose the money you're just forced to buy the shares at the strike price of the put options you shorted. So if the stock price goes below the strike price, you do lose money because you sold a put contract at a higher price but end of the day at least you'll hold shares so it's not a total loss.. it happened to me before and I just held the stock until I could exit even but it sucked
