Hi there
Logon to your online broker and to get the options screens choose QUOTE==> CHAINS (most brokers trading options have reasonably similar screens). Select the expiry date you want to trade the option in for example on OPTIONSXPRESS its JunWK2. Click Trade on the strike price you want (CALL or PUT)
1) trade goes SELL TO OPEN. ( if you want to BUY BACK an option then select BUY TO CLOSE).
2) Look at the BID / ASK spread -- on something like the Q's the spread isn't too much. I tend to put in a value roughly mid way between ASK and BID.
If the trade isn't executed within a resonable time just cancel it and trade again with a lower value.
If you chose a reasonable value the trade should be executed pretty well immediately.
OPTIONXPRESS (and most other brokers I'm sure) will also send you an email of your trade details -- keep all these --print and file or save in a decent archive system -- if you store on a computer HAVE A GOOD BACKUP.
These are a great help in your profit / loss position and also to keep track of your positions -- you also have the online brokers system of your trades but I find it good to have this copy at home as well.
Incidentally on the Q's you can trade these WEEKLY -- if you can afford the shares its not a bad stock since being a Composite Index you are isolated from huge market fluctuations and there is ZERO chance even with "Balck Monday" type of days of this stock ever going to zero.
For example current price is 56.44 (Close Fri Jun 3)
CALL option @ strike of 57 expiry 11 June 0.24 Good if you think Q's will rise -- so you'll get 24 C per share + 56 C per share if you are called - and you only have to wait 4 days.
If you get called then you will have made 56 + 24 dollars = 80 dollars - approx 15 dollars dealing which leaves you 65 USD. Do this every week and that's over 300 USD per month.
If you DON'T get called then your profit is probably one or two dollars so you really need to consider at least 5 contracts.
If the share gets near 57 you could if you want to lock in more profit BUY BACK your call on the Thursday before expiration and then IMMEDITELY SELL another CALL.
On the other hand if you think the market is going to continue DOWN decide what price you still would consider holding the Q's and then SELL A PUT.
Again if you don't want to get PUT at the strike price then on the Thursday BUY it back and then SELL another PUT at a lower strike.
I'd look while I'm starting in a share half the price of the Q's so I could trade a minimum of 5 contracts. Look at something like MICROSOFT also tradeable weekly -- shares are relatively stable (good for Options) and cost is about 50% less than the Q's.
While the long term prospects of MS are still oen to question its currently trading OK so good for options at the moment.
Calculate carefully -- it's possible to make reasonable gains EVERY WEEK with OPTIONS -- WEEKLYS are really great.
I'm not in favour of LONG EXPIRY options -- you can work out difference in gaining a decent (but smallish) amount EVERY WEEK or sitting in for the LONGER expiry options.
A base rule of thumb is that on the same stock in general you would make TWICE as much money on 4 WEEKLY'S compared with ONE MONTHLY option. The monthly premiums might seem higher but work out percentages carefully and avoid the error most people make in calculating the gain INCORRECTLY.
Your actual money at risk is the cost of the stock MINUS THE PREMIUM RECEIVED. People often overlook this.
(remember to include dealing costs too).
A list Tradeable weekly shares is avaliable at the CBOE site -- see my other posts in this Forum.
Cheers
jimbo
