Are Long Puts not Easy Money?
This is a newbie question for sure. Is it just me or should buying long puts be quick and easy money? I'm just trying to understand this so bear with me.
For example, the QQQ current price is 457.93. Why not buy a June 4th put option with a 456 strike, wait a day or two (let's just assume the price will go down short term for this example), be profitable and sell the contract? Did I miss something?
Also, I see people buying put options with a lower strike. But why? Isn't the whole point to hit the strike and go beyond it to make profit? So why not just pick the next, soonest put strike in the options chain rather than something lower. In the QQQ example, why are people getting June 4th puts at a 455 strike rather than 456? Seems more profitable is to pick 456 rather than 455 and more achievable in the timeframe, no?
I get it that price can go up, take longer to play out, or go sideways, among other possibilities. Please let's just assume a constant move down in this example to keep things simple.
Posted by the_humeister
2 Comments
Any trade is quick and easy money assuming you know with 100% certainty how the market is going to move
Hahaha thank you, was waiting for this version. Yeah if you’re looking for advice: as many contracts as possible. At this point, more leverage = more gains