08-18-2010, 09:55 AM
I'm the same way - gambling only.
The way you should use them is, if you own 100 shares of AAPL and you think the stock may go down, buy a put as a hedge against that happen. The benefit of that is you don't have to sell your shares, which might trigger a regular-income tax event if you've held them less than a year. Or if you sell at a loss, could prevent you buying them back when you want to due to the wash sale rule.
Same with calls - if you own stock and you think it isn't going anywhere for a while, you can sell calls for income. Selling a naked call (without you owning the underlying stock) would be pretty risky. I've never written a call, I only buy them.
The way you should use them is, if you own 100 shares of AAPL and you think the stock may go down, buy a put as a hedge against that happen. The benefit of that is you don't have to sell your shares, which might trigger a regular-income tax event if you've held them less than a year. Or if you sell at a loss, could prevent you buying them back when you want to due to the wash sale rule.
Same with calls - if you own stock and you think it isn't going anywhere for a while, you can sell calls for income. Selling a naked call (without you owning the underlying stock) would be pretty risky. I've never written a call, I only buy them.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Currently PvPing in the stock market