Lets say i know, legally, that a companys stock is going to tank and drop at least 10 points in value. Ive got $5000 to invest and i want to know how to capitalize on this as much as i possibly can... a put option seems like the way to go since i could only borrow a few thousand more dollars on margin.
How do put options work? ive been looking on E*trade and a few other sites for some info and its all giberish to me. (in-the-money, strike price, etc)
Can i cash out whenever i want during the life of the contract or is it just the 3rd friday of the month?
How do i figure out how much a contract will cost? its currently around $60 a share and i expect it to be at $45 in the next 2 months. please take into account that i am bad at math.
Is there a limit to how many contracts i can buy? Could i buy 1000 contracts @ $5 each? If/when the stock drops i have someone to spot me the money to buy the necissary shares to fulfill the contracts, so the sky is the limit
2007-03-06
09:42:20
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5 answers
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asked by
Chris M
2