FMAN

  

Categories: Derivatives

There are three regular option cycles: FMAN, JAJO, and MJSD. FMAN stands for February, May, August, and November, which is the pattern for when option contracts on one cycle expire.

If you need a refresher, options are securities that are bets on other securities. For instance, you can place a bet that a certain ETF, index, or other asset will hit a certain price (a “strike price”) by investing in an option. That’s why expiration dates for options are so important: they determine who wins and who loses in the options game.

Unlike long-term investors, options investors are always on their toes. Before an option expires, the options holder can “exercise” the option (which means buying or selling the stock at the strike price, for call and put options respectively) or not, whichever they choose. FMAN is the time when options holders have to choose what to do, like a real MAN.

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Finance: What is a naked option/position...7 Views

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Finance a la shmoop what is a naked option or naked option position? alright

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warning you're going to be disappointed in this video it's not nearly as hot as [Censored man jumps into lake]

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you probably hope naked options are just options that you sell or buy without

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having enough of the underlying security to cover your if the price changes in

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the wrong direction all right well they're an investment

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that stands on their own but with extreme amounts of risk.....You invest [Man discussing investment in a lake]

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$10,000 in coca-cola stock at 40 bucks a share buying 250 shares the stock goes

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up $2 in a year or 5% not a bad score and you've made a whopping five percent on

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your money or about five hundred bucks you bought the stock not the option and

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remember when you own the stock you can own it forever there's no clock ticking [Clock ticking by]

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in the background like there is with an option okay but let's say you had spent

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that same 10 grand worth of naked coca-cola call options on options with a

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strike price of 42.50 expiring in four months well the stock remains at 42.50

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the whole time doesn't budge well guess what you've lost all of your money [Man with empty jean pockets]

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had the stock under $45 however that 10 grand invested in those call options

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which bought you exposure to some 20,000 shares would have made you something

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like 250 a share that's of in-the-money value on those options times 20,000

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shares or 50 grand yeah way more than your boring experience of just owning

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the stock and making a whopping 500 bucks but you'll also risk losing

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everything and this kind of foot's with whole notion of risk and reward being [Man in between reward and risk]

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married in some unholy alliance where they kind of wrestle and yell at each

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other all the time right so you took a lot of risk in buying

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call options with nothing behind them you bought em naked

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you could have made a fortune but you didn't because he played it safe and

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bought the stock well in reality professional investors rarely just buy

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naked options alone because they are so risky and so volatile but every now and [Ball spinning on roulette wheel]

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then somebody bets the ranch on 22 black it comes up they make 36 times their

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money in a week and everyone asked them for the best way to angle their thumb

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when they're trying to flip a head on a quarter and we actually have a whole

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video on that you should watch it it's kind of depressing...

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