02/17/2022
On this post Iām going to try my best to explain what a option call/put is. U will need to āenable optionsā on robinhood settings. You have to apply for this. Theyāll ask how much you make and whatās your experience. I lied š¤
Income over $100k and very experienced. Also Youll be using money from your job to fund your account for long term investments. Thenā¦
First youāll pick a stock.
Click on trade.
Click on trade options.
Then choose a date. (Iāll explain how to choose to date below)
Now you have figured out how to get to the options trading, letās explain what that isā¦
Now letās say thereās a house is for sale. The house is $100k. But you know the house will be worth $150k or more by 2/25. So you tell the owner that you will buy the house for $100k. And youāll pay him on or before 2/25. You donāt have $100k to buy it but you have $1000 for him to lock you in on that $100k price. He takes the $1000 and he writes up a contract promising youāll have rights to buy the house for $100k by 2/25. Now hereās the cool partā¦2 days later the house is worth $170k because of inflation. š±š±
So hereās what you do, sell that contract for $1500 to a person that has $100k to buy the home. Now they have the right to buy the home for $100k instead of $170k. And why wouldnāt they.
šØLook at this last pic
A āCallā is betting price goes up.
A āPutā is betting price goes down.
White -Contract expiration date.
Red -The option contract
Green -The cost you think the stock price will go to before the expiration date.
Blue -The current cost of the stock
Yellow -The current cost of the option contract. (Multiply by 100)
āThe houseā = 100 shares
āThe contractā = Options
Buy/sell contracts instead of the shares š”