http://www.smartmoney.com/commonsense/index.cfm?story=20070130
First reader comment to the article:
I've never messed with options before, and maybe never will, but this sounded interesting. Do any of you think this is a good buy at today's price? Any other stocks with cheap calls, or expensive puts? What's a good way to find them? How to decide if cheap? Does broker really deposit cash into account when sell a naked put? (I've heard most don't let you get good interest on cash when selling stock short, but never tried.) Where's an easy and/or trustworthy place to check up on the latest prices for calls and puts?
I know that many people think it's usually better to find a stock to buy and sell the call, rather than buy a call on speculation, but my theory is that too many people are selling calls, so some of them may be cheap.
....Intel calls. I noticed that the premium amounted to only pennies a share. I wasn't planning to buy any, but I couldn't resist this level of a bargain. With the successful Microsoft experience still in my mind and Intel trading at slightly over $20, I bought the $10 calls expiring in 2009 for just over $10 a contract. Yes, you read that right — 2009. That's nearly two years, for which I paid a premium of a few cents.
First reader comment to the article:
You could also SELL the 2009 Put with a strike of $30 for $9.10 bid. INTC closed Tuesday @20.93 +.04 for the day. So the short put would (1) make you a few cents rather than costing you money, (2) deposit $910 per contract into your brokerage account right now, and (3) give you dollar-for-dollar profit up to 43.5% appreciation in the underlying over the next two years.
I've never messed with options before, and maybe never will, but this sounded interesting. Do any of you think this is a good buy at today's price? Any other stocks with cheap calls, or expensive puts? What's a good way to find them? How to decide if cheap? Does broker really deposit cash into account when sell a naked put? (I've heard most don't let you get good interest on cash when selling stock short, but never tried.) Where's an easy and/or trustworthy place to check up on the latest prices for calls and puts?
I know that many people think it's usually better to find a stock to buy and sell the call, rather than buy a call on speculation, but my theory is that too many people are selling calls, so some of them may be cheap.