Clark Howard is an ass. period

It's one strategy just as selling covered calls, that everyone seems to think is risk adverse, is. I've made quite a bit of $$$ buying way out of the money calls on (ALK, AAPL for example).
Remember, you can sell the options at any time-you don't have to wait until the expiration date-in fact very few do wait. With the Jan 12.50 call sitting at 1.10 right now, if the underlying stock goes to 11.70 in the next 2-3 months, the option "should be" around 1.50 or a 36% increase with just a 6% in the stock price. A 6% stock price increase will have around a 10% increase on your $9 ITM calls-do you realize the difference? Risk/reward-that's all.
It's a simple way to leverage stock price increases over the short term. With oil coming down and industry estimates going up, it might be worth a look to some. Should be interesting to see where we are mid July-Aug.

Talking about percentages when talking about buying selling calls (when compared to the underlying stock) is an apples to oranges comparison. Of course you are going to make a bigger percentage gain with the option. And.. you are correct that you can sell that option if it goes up to collect that gain. No argument there. The question is... will you? hehehehe Let's suppose that you are praying for it to hit the $13.60 in order to make money.. with the deep in the money call, your percentage gain is waaaaay bigger, but I tend to not look at percentages in options because you don't play with the same amount of money as you would if you were strictly investing in the underlying security. BTW.. I am glad you made money in AAPL options.. their premium is way to scary for me. But I do think that this is a good time to buy the underlying.. I have an order in right now.. YMMV of course


For anybody: Do you ever long the option and then short the stock? This is a Jim Cramer idea, and I have tried it a couple of times.. you literally cannot lose money.. it's hard to increase the gain you have locked in with the short.. but you definitely cannot lose money doing that.. I was wondering is anybody else has gone this route..

Great discussion.

I would pay to see Dave Ramsey kick Clark Howard's ass.

My strategy is to lock in a specific % of gains-keeps emotions out of it. I never expect nor wait for the underlying to hit the strike price + premium paid. (APPL was unique in that expiration was 2 years out and my far OTM calls quickly became ITM). I will watch this one(Jan '12 12.5s) as I am curious about the potential "recovery play" this summer. In this case, I would sell them all with a 25% gain which could be in the next month or two (my estimation). I am typically all out 4 months out (September in this example), so as to avoid premiums being quickly eroded.

BTW, a great website with a variety of strategies.
Options Strategies: Getting Started

That's cool.... I just look for "mad money" I have all my beer paid for for the rest of the year so far. At this point, it's just for the thrill of the kill anyway. It is funny though how we can latch on to such differing philosophies. I have been to that website before too. Interesting stuff there, but I don't want to spend all day in front of the computer.

Absolutely!!!!!!!!

FREEDOM!!!!!!!

Well money has been gettin tight for a few years now. With two of my nine kids graduating prison this year, me an my Bi&%h are gonna downsize. I been working on it for a few months now.

You ought to move out to LA Nerd, you get a lot less trailer for your money. Depends on what part of the city you want to live in but I'm sure your boyz could hook up with some nice young men in a gang nearby.

Whatz a Barney ?

Anywayz, on the food stamp jet, whe have to move to the rich section so when we stand outsidea Publix the rich folk will only drop singles in your beggin shoe !

I try not to bring the kids causin they pick theyr nose.