Calls, Puts, Straddles, Spreads and Combinations

First, let me apologize for being so delinquent with this week's Monkeyshines installment - I've been a tad busy (gross understatement). I will hopefully have some time Friday morning to put something together and post the images for this and the previous visit, before I jump on a bus and head up to Boston for the nuptials between Jon and Allison, over which I will be officiating.

I had the day "off" yesterday due to a canceled (adjourned) court date, so I took advantage of the time and got some things done. I was asked to speak at the King's Knight Worker's Group, then I went into Manhattan after that. I met with my lawyer (Pat) to go over some miscellany and then spent some time in one of my new favorite places to sit and think - Battery Park. It was really nice sitting on a bench in the Sun, listening to the birds and the water lapping at the wall, looking across the harbor at Lady Liberty, Jersey and Brooklyn, and smelling the sycamore trees. I watched the Staten Island Ferry come and go, watched the tourists filing on and off the Circle Line ships, and watched people haggle with the vendors.

After getting some Zen back in my carcass, I headed across the park to Battery Place where I have been taking the Series 7 classes. Last night we began learning about options. Options are not stocks, they are contracts to buy and sell stocks at set prices and times. The weird thing is that people are buying, selling and trading things (the options) that they don't own and most often never own. In this way you can make money on a stock if you think it is going to go down (buying a "put") or up (buying a call), and by buying (or selling) various combinations of calls and puts you can bet on volatility, stability, just get paid a premium for doing nothing or even protect yourself from significant losses.

It seemed from last night's class like the selling of these options was the shitty end of the stick, because even though you get a premium over the current stock price for locking into a contract, you can get killed if the stock moves into the money (i.e. in the direction you didn't want it to go). In other words, you are risking relatively unlimited losses for a modest set gain. We were told that only the most senior traders were ever allowed to do such things by the firms they work for - to me it just sounded unnecessarily stressful. It was cool though to learn about it all and do the math - my financial kung-fu is getting stronger!

I have the kids tonight for a brief visit, will make a meeting afterwards, then will try to get some sleep - tomorrow I go back to court for more of that joy - hopefully the grounds stuff will get resolved (but probably not) - then off to class again tomorrow evening for the rest of the options stuff. Next week will be my last week of classes, then I'm on my own to take a million practice tests in preparation for the exam on October 13th - more on that as the day approaches.