i have no idea how to buy options. the reading i’ve done has gone in one eyeball and out the other.
the main confusion is with the profit margin… how do you determine that? for one, i know you can buy and sell the options themselves… but which do you buy? which strike price? if you buy a $20 strike for jan 08 which is trading at 5.41, you spend $541 to buy the option, wait for the stock to drop and either the option goes up in value and sell it or exercise the option by buying the 100 shares first?
or what about the higher strikes, say a $35 option… buy at 16.30 and then…? could you immediately buy shares at the current 18.9 and exercise for an immediate 2.6/share profit?
edit: or… you buy at the current 18.9 and sell at the strike of $35…???
