Saturday, November 2, 2013

Recent Trade

When the markets at an all time I, I decided to make a very small purchase due to not having a lot a cash.  On Oct 29th, I bought  Bank of Nova Scotia Dec 21 2013 62.50 Put Option at a cost of 60.95 including commissions. If the price of the stock goes down then the value of the Put option goes up.

I have 3 options when it comes this trade.
  (1) If the market goes up, I can do nothing and let the option expire worthless. My loss would be my overall purchase price of the option
(2) I can exercise the option, which mean I get to purchase the 100 shares at 62.50 of Bank of Nova Scotia.
(3) I can Sell to Close my option to another trader or investor.

The closer I am to the expiration day the effect of the market will have less and less  effect of the price of the option.  I am not an investment professional, so I won't go into detail about why happens.

Buying an option, whether a call option of put option, allows an investor or trader to control 100 shares of a company  for very little money.


     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

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