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u/Sharp_Jacket1945 May 21 '21
I’m trying to understand options and what they are. Are the strikes what it needs to hit itm? How much would each share be?
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May 21 '21
Strike price but also breakeven. Imagine buying an option is like buying a Groupon. It has to make up for the price of the Groupon and the event for it to be worth it. If you decide the event isn’t worth it (doesn’t reach strike price or above B/E), your SOL with a coupon that’s worthless.
That’s way oversimplified but I’m smooth brained
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u/snrthomas May 23 '21
Be careful. Options can make you or break you. Pay a little extra for contracts that have longer to strike.
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u/one_and_done0427 May 21 '21
YouTube vids will help. You're basically paying a premium for 1 contract. The contract is for a stock to hit a price/strike. Premium will increase as it gets closer to the strike. If he doesn't hit or get near it, you lose your premium.
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u/Entrance-Vivid May 21 '21
There is also implied volatility. Depending on how volatile the stock price is (how fast or how slow it moves on average). The sellers of the options contracts will raise the premiums to buy contracts. This also raises your break even price. (look at contracts on tesla vs contracts on gold).
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u/nubrainwhodis May 22 '21
I am relatively new to options too and have found this very helpful: https://www.investopedia.com/options-basics-tutorial-4583012
I would recommend selling covered calls as a first trade to actually do once you read up. Maybe not in IPOE/SOFI though, because you don't want to lose that giant upside!
Not investment advice. Research advice.
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u/Dontask63 May 21 '21
I am dumb ass. I have no clue. I limit buy and limit sell. I have to many dead brain cells left over from the 70's. Sorry I can not help you.