Forum Archive Index - March 2004

[mixtrader <mixtrader@clear.net.nz>]

Looks like a fairly good reply from Baa Baa (made perfect sense to me
anyway).  It is unfortunate that the NZ market doesn't have the depth to
support really active options trading such as experienced in the USA.  We
certainly suffer from a shortage of venture capital in NZ, to some extent
the options market fills this void in USA.

I am currently considering expanded trading in USA market - can anyone
recommend a reasonable publication (or access to electronic media) that
discusses the benefits and the pitfalls (costs) in establishing a USA bank
account and a trading account with an on-line broker (don't expect broker
recommendations, just the legal and other issues that may arise).  Has
anyone completed a cost comparison on whether there is advantage in having a
bank account in a country that you are trading in as opposed to operating
offshore trading activities using an offshore broker but an account
domiciled in NZ.  Have any of you traded shares in overseas markets using NZ
brokers?

Hard to say whether I am gambling or not but it all seems worth it for the
thrill of getting it right from time to time.

Don't go Cris - divergent opinions and values is what makes the world an
interesting place - I hate dull moments.

----- Original Message ----- 
From: "Baa Baa" <baa_baa@hotmail.com>
To: <sharechat@sharechat.co.nz>
Sent: Monday, March 22, 2004 5:35 PM
Subject: RE: [sharechat] Option trading


> No. You have initially 'bought to open' (a position) being a call option
for
> the premium (price) you paid. You chose then to 'sell to close', and was
> paid the premium by the buyer. The initial WRITER of the option who 'Sold
to
> open' is the one who holds the stocks required to fulfill the call option
> should it be exercised.
>
>
> >From: Paul & Eunice <paul.c@paradise.net.nz>
> >Reply-To: sharechat@sharechat.co.nz
> >To: sharechat@sharechat.co.nz
> >Subject: [sharechat] Option trading
> >Date: Mon, 22 Mar 2004 17:21:38 +1200
> >
> >I have been doing a bit of reading about the use of options as an
> >alternative to buying the underlying stock. However, I can't find
anywhere
> >the answer to the following question.
> >
> >If I decide to directly sell a call option (after I have initially bought
> >the option on the market) before the expiration date (and not purchase
the
> >underlying stock), am I then required to purchase and deliver the
> >underlying stock to the person who has bought my call option if they
decide
> >to exercise the call (before the expiration date)?
> >
> >A simple question indeed but my reading provides no clear answer.
> >Obviously, you can make a profit if you sell the option directly (rather
> >than exercising), but there appears to be a huge risk if you have to
> >deliver the stock at the strike price once you have sold it. Is the
answer
> >that you can simply 'close' the option (and take the money) and the call
> >option then ceases to exist without any further obligation?
> >
> >Paul
>
> _________________________________________________________________
> There's never been a better time to get Xtra JetStream @
> http://xtra.co.nz/jetstream
>
>
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