I went down the rabbit hole of videos on options trading and none ever got to the point of what I searched for. So, if any one can answer this question for me, and you make YouTube videos you should create on specifically for my question. You’d get tons of views because nobody seems to simply it.
What happens to your money when you miss on a trade? Meaning, if I buy a PUT, and i am wrong, how much money do I lose? Is it just the amount I spent to buy it? That last of the videos I watched said to buy 100 shares at $1.45 = $145 invested. Now, my question is if the stock doesn’t do anything I wanted it to do by the date, do I only lose the $145?
I hope that question makes sense because I assumed that if I think a $10 stock is going to $9 by a specific date, that if it doesn’t I have to buy the 100 shares for $1000.
morning bro.
when you miss on a trade, meaning that the trend doesn't go in the direction of your strike price (whether its a call or a put) it expires worthless & the seller keeps the premium you paid for the option. for you, if you buy a call or a put, the only thing on the line for you is the premium you paid. you're not obligated to do anything, which is why its called an OPTION. you have the option to buy the shares or you have the option to sell the contract to someone else