I want to buy stock using options and want to minimize the loss potential. I want to buy out as far in the future as possible. I dont care about the profit as I just want to minimize a loss. Any strategy suggestions?
2006-09-04 05:25:50 · 6 answers · asked by Anonymous in Business & Finance ➔ Investing
Sell covered calls... it doesn't get more conservative than that. If you really want to buy, look for companies that are volatile and play both sides of the option... both calls and puts. Who knows, you might hit bit and win big... if you hit just the call or put, you might still make a tidy profit... you'll only lose if the stock price stays steady... that's why you need a share price that has a lot of ups and downs.
2006-09-04 07:42:30 · answer #1 · answered by Mike S 7 · 0⤊ 0⤋
What do you mean you do not care about the profit? If you want to minimize the potential for loss you buy the stock and buy a put on the stock at or just below the price of the security. That way you are protected completely below the strike price of the put. How far out to buy the put for will depend on the time spread. The further out you go the more it will cost you. If the price of the security does not go up in price you are out the price of the put without any offsetting increase in value of the security. If on the other hand the price drops, you have full protection minus the cost of the put.
2006-09-04 13:02:35 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you're looking to buy stock using options then you would want to buy calls. This would allow you to profit if the stock went up, but would limit your loss to the amount paid for the call option. For example if you wanted to "get long" Yahoo stock but wanted to use options instead, you could buy the January 2007 30 calls for $2.25 instead of paying $29 for the stock. If the stock finishes above $32.25 ($30 strike price + $2.25 option price) you make money. You also are limited to a $2.25 loss if the stock goes down, whereas if you bought the stock you could lose up to $29. If you want to buy options that are further out, you can buy options going out to January 2009 in many stocks.
2006-09-06 09:47:11 · answer #3 · answered by yogidanon 1 · 0⤊ 0⤋
Fixed Index Annuities.
Your Account Value will NOT Decline in Value.
Any Interest you earn will NOT Decline in Value.
Interest is earned each year using a Crediting Method that is based on a Stock Index. The Upside on the Index is Caped in exchange for you account and interest NOT Declining when the Index Declines that year.
The inner workings of the crediting method is an option on an Index.
So in effect this is a super safe way to buy an option.
Learn more about Fixed Index Annuities go to: http://www.jdsannuities.com/index_annuities
Did I mention that all of your earnings grow Tax Deferred?
2006-09-06 13:27:33 · answer #4 · answered by Joe the Expert 2 · 0⤊ 0⤋
forget about the stock market, there are a lot of really well versed investors out there that cant figure out the stock market, what makes you think that you can
theres an old saying that the only real winners in the stock market is the stock brokers themselves (because they make a commission everytime you buy and you sell)
invest in mutual lfunds, they spread your money out over a number of indsutries and companies and have a team of experts to manage the funds
2006-09-04 13:05:25 · answer #5 · answered by capollar 4 · 0⤊ 0⤋
invest in the least risk avenues... or put the money in a bank!
2006-09-04 12:49:46 · answer #6 · answered by Anonymous · 0⤊ 0⤋