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Listener Mail: Listener questions and comments
- Question from Kevin Duggan: Re:?No cost collars with long put LEAPS and short term call writes. How do you manage them when the stock drops? Then the calls. I want to write have little premium since they’re now way OTM and, I don’t want to lock in a loss by getting assigned at a lower strike than I paid for the stock. So a question for Randy since he has a lot of experience in this area: When it becomes apparent that my client won’t be able to recover the premium paid for the put, how do I manage/close the collar without a loss? Details please (fry my brain, I can take it!). Also, the lure of “no cost insurance” gets me the meeting, how do I explain the worst case scenario and still get the order? Thanks.
- Question from Alan Charles – I am a client of Wells Fargo. After listening to your show, I decided to check out Well Fargo?s options offerings. This particular paragraph caught my eye: ?Please note: Although options can be used to hedge an existing investment, options can also expose you to potentially significant risks. An investor who purchases options may lose the entire amount committed to the options in a relatively short period of time.??I understand that they have to include disclaimer material, but does that seem like they are essentially saying “do not use these products at any cost.”? What is your view of Wells Fargo? Are they an options friendly shop or should I take my business elsewhere? Great show! Great network! Nothing else like it on the dial.
- Question from Sea Biscuit – Hey guys! Digging the Advisors Option program. Just discovered it while listening to Options Boot Camp through you mobile app for android. I heard you guys mention extrinsic value on an early show. I am still not clear on the difference between extrinsic and intrinsic value. I know intrinsic changes with the value of the underlying, but what about extrinsic? Does that also change with the underlying, or can it move without it?
- Question from Christian – If you buy an option on a company that ends up merging or being bought out with another, what happens to the option you own?
- Question from Ingraham – Question from the OIC boys Eric and Alan G – You guys travel the world talking to advisors about options. Which firms do you feel are the most options-centric?
- Question from C. Dutney, Ithaca, NY – How do I find an advisor in my area who is skilled in the topics that you discuss on your program? Is there some database I can access? Does Mr. Swan?s firm take individual clients from my area? My account size is in the low six figures.
- Question from Cat – I want to set up an options trading account for my son (who is 23 years old) and I want him to learn to trade options in a risk-managed way – I do not really want him to know that he can use options for taking stupid risks (he will probably figure that out on his own soon enough). I contacted the customer services people at Firm X to see how an account could be set up to achieve my goals and was told that initially all he could do would be to buy puts and buy calls. Seriously? That?s exactly what I do not want him to do. I want him to control his risks better than that and to learn to put on spreads from the get go. Is there any way that my goal can be accomplished?