First stock options

Three months later Lee decided to sell his first stock options.

He also talked to the person who had 100 shares to let them know it was time to learn about something the person could use in the future.

Lee sat down with a lawyer to set up the legalities of stock options and explained how they work from the experience using them in his past life.

Say you owned stock and you thought the stock would go up in price. You would sell a covered call option at the next price above the current price. For example: the stock price is currently at 5.00 and you think it will go above 5.50. You own 100 shares of that stock so you sell a stock option that expires a week out (on a Friday). the expiration date would look something like this 10 July 33 5.50 C 100.

(Day, Month, Year, Price of stock, type of option, how many shares each option covers)

Options can range from 0.50 to 5.00 in the price of stock difference. From now on referred to as Strike price.

Lee sold 99 call options that were covered by the stock at a strike price of 5.50 this is known as a covered call.

the current price for the stock was 5.45 and Lee thought that it would hit above 5.50 before the expiration date which is how he could command a price of 40 dollars per option.

He sold each one at $.40 per stock which added up to $40 per call option with a total of 3960 dollars worth of income.

Lee gave his Dad a small portion of it to send in towards taxes that the King would collect at the end of the year anyways and the rest he had to find a way to keep safe so Lee decided to open a family bank that was privately owned and only family could put money into.

That's a story for another day.

Anyways the person who bought the 100 shares sold a call option with a lower strike price for even more but only gained $1.00 per share from it totally returning the money invested ($40) and then some.

The Friday that the expiration date was set for came around and the one that sold the 1 Call option asked Lee what he had to do since there were no laws governing the exchange of stocks and stock options yet. Lee told him that he needed to sell the shares to the holder of the call option at the specified strike price at the end of the day since it expired in the money and report the sale to the government, as Lee would also do, and report it back to the corporation so that they could issue the stock to the person who bought it in a timely manner since the technology was not there yet to be able to do so automatically.

As for Lee's Stock options they expired out of the money at 5.49 in stock price so Lee decided to do it again with the expiration date a month out but same strike price. This would give him time to start looking for the next business that he could help do the same thing as he had done for his father's business.

This time Lee brought in 5445 dollars.

He was able to withdraw a portion of what he had in the bank to get up to 9000 dollars leaving 405 minus taxes to be able to purchase into the next business.

He did find another business and bought into it. Lee went through all the trouble getting everything set up for the business to become incorporated and raised 10,000 for the company in the IPO (Initial Public Offering) but beyond that the stock price fell down to 1 dollar per share which Lee had 10,000 of. at the end of the third month Lee sold 100 stock options and only got 1 dollar per stock option on at a month expiration date out.

Both sets of shares expired in the money so he got 10000 for one and 54450 for the other he was out of the second one as quickly as possible within 3 months and out of the one for his father's business within 5 and had gained 55450 from both businesses.

Lee decided to put out put options for 5,000 shares of his Dad's corporation at $6 per share strike price.

he raised another 1600 in the process which would go toward the purchase in case the put options expired in the money. bringing total that he would have to actually pay for the stock down to 28400 break even price or 5.68 per share.

As word started to get around with how he was helping businesses grow people started asking him to become a silent partner in their business and help them out not all of them went his way because of greedy business owners who thought they could take advantage of him but enough went his way so he could build an entity that helped control the buying and selling of stock and stock options while being able to do so himself.

Lee didn't always have a perfect winning streak and at times almost lost most of the money but as he was able to trade stocks he was able to get into other businesses and take them public on the newly formed stock exchange.

As the initial work was done each time to set up corporations he shared with the lawyers the experiences he had and actually had to sue a few business owners to pay him back for damages done because of the business owners not holding up their end of the contract and giving him a share in the company.

Lee eventually was able to go full time trading stocks and stock options as well as teach others to be able to do the same. (This included the aide to the King.)