|From what I have been reading, basically it is an option with a fixed outcome with a short expiration (usually within an hour or the end of the day).
Posted: 7/13/2010 2:20:25 AM
Buy a call if you think the security will expire above the strike price, buy a put if you think it will expire below. Here is where it gets interesting...
If you are correct you receive anywhere from 65-75% of profit...if you are wrong you receive 10-15% of your investment back.
Example...Google is at $300 right now...I buy a $100 call option betting that it will end the day higher than that. $100 is removed from my account for the purchase of this call option. Google ends the day at $301. My account receives $170. If Google ends the day at $299 my account receives only $15 back.
Seems like betting over/unders with juice but I was just wondering if anyone had any experiences with it good or bad.