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Newbie Options Trading Questions
1) The Situation
I spot an upward trend in stock XYZ. The stock price is $80. If the price falls to $78 I will admit I was wrong and exit the trade. If I am correct the upward trend may last more than a year and I will stay in for the duration. 2) The Problem To purchase a block of 100 shares will cost $8000. The amount of risk I am willing to assume is 2% which at the current time means I can only afford to buy 15 shares. 3) Options Solution? I don't know anything about trading in stock options. But I suspect it may provide a solution to this problem. 4) My Questions Is there any way I can purchase stocks in blocks smaller that 100 shares? Is there an options trade that will simulate the risk to reward ratio I want based on the price movements of stock XYZ? What if the upward trend lasts for several years? How do I roll over or extend the options trade to take advantage of this? 5) Thanks Thanks in advance to all who reply. I hope the questions aren't too basic. I'm here to learn. |
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