Newbie Options Trading

[dmunjal]

Yes, but who cares? Probably move this to the grammer (sic) thread. Also English should be capitalized.

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Because the option is out-of-the-money, the only value it has is the "time value", which is the value assigned to the possibility of it becoming in-the-money between now and expiry. Since there is literally no way to judge this accurately, emotion, sentiment, news, randomness, whatever, can influence the current price. This is exactly what others have said, just phrased differently.

There is actually some science behind calculating the value of options. Take a look a the Black-Sholes formula. Most brokerages calculate this for you as the theoretical value.

Black–Scholes - Wikipedia, the free encyclopedia

 

[c041v]

This thing is pretty neat-o at predicting/planning the value of your options. You can get some pretty exotic red and green contrast with some of the more advanced strategies.

http://www.optionsprofitcalculator.com/

 

[Jonathan Hewitt]

An ATH close is an ATH close and not to be looked down upon, it's just I have this feeling that the rise on thursday and friday as like a house of cards and all it takes is a gust of wind and we're back in the low 130's or even 120's before market close on wednesday.

I wouldn't be surprised if Monday it continues to trend up, Tuesday massive pre earnings sell off, then Wednesday nothing happens as all bets will have been placed by then...That's my WAG

Disclosure: I sold a couple calls Friday just in case it goes down Monday. I would like to buy a few more "lottery tickets" with it and hope there's a good opportunity at least one of the days before the ER. The only lottery tickets I have right now are two AUG 17th 160s. The best time to get lottery tickets was the GS dip but all the calls I bought at the bottom I sold the next day after the 10% stock price increase as they were up 55% and I figured that was a good time to take a profit on them.

 

[InTheShadows]

Could someone explain to me how to read these charts? Are there any other options charts that are similar that would be very helpful for deciding which ones to buy?

 

[emupilot]

What options to buy really depends on why you want to buy options. Are you looking for a leveraged long-term investment? Are you planning on buying on the dips and selling after a rise? Are you speculating for huge gains (or losing all your investment)? Do you want to play weekly options roulette?

 

[Jonathan Hewitt]

I wouldn't be surprised if Monday it continues to trend up, Tuesday massive pre earnings sell off, then Wednesday nothing happens as all bets will have been placed by then...That's my WAG

My guess from Saturday hasn't been so bad so far. It trended up yesterday and there was some sell off today...I guess it wasn't massive though. If it doesn't stay flat tomorrow and goes down more I am going to "roll down" my puts

 

[hershey101]

sleepyhead's great analysis made me buy more today. Anyone care to weigh in on the following positions:

+2 $100 Aug '13 call @42.7
-1 $130 Sept '13 put @8.15
-1 $155 Sept '13 put @21.21
-1 $135 Jan '15 put @36.54
-1 $145 Jan '15 put @42.77

The last two seem like too far out to be any good. I have been selling puts instead of buying calls because the premiums are sooo high but if the stock tanks tomorrow I'll have to move fast to close these positions.

 

[emupilot]

sleepyhead's great analysis made me buy more today. Anyone care to weigh in on the following positions:

+2 $100 Aug '13 call @42.7
-1 $130 Sept '13 put @8.15
-1 $155 Sept '13 put @21.21
-1 $135 Jan '15 put @36.54
-1 $145 Jan '15 put @42.77

The last two seem like too far out to be any good. I have been selling puts instead of buying calls because the premiums are sooo high but if the stock tanks tomorrow I'll have to move fast to close these positions.

I agree that the last two won't react strongly tomorrow, but they might be part of a long-term strategy. I stick to buying calls and added Jan 2015 to increase my core position. I've got Sep 2013 110-130C, a token Sep2013 170C for fun, and Jan 2014 135 & 150C. I'm as all-in as I'm willing to go. Your move, Elon.

 

[hershey101]

I agree that the last two won't react strongly tomorrow, but they might be part of a long-term strategy. I stick to buying calls and added Jan 2015 to increase my core position. I've got Sep 2013 110-130C, a token Sep2013 170C for fun, and Jan 2014 135 & 150C. I'm as all-in as I'm willing to go. Your move, Elon.

I bought the $100 as a DITM call replacement strategy yesterday considering that the dip yesterday was a good thing. Now w/ the stock so low, I'm considering rolling up the strikes to something more speculative and moving out to a future month. Any thoughts?

 

[deonb]

sleepyhead's great analysis made me buy more today. Anyone care to weigh in on the following positions:

+2 $100 Aug '13 call @42.7
-1 $130 Sept '13 put @8.15
-1 $155 Sept '13 put @21.21
-1 $135 Jan '15 put @36.54
-1 $145 Jan '15 put @42.77

The last two seem like too far out to be any good. I have been selling puts instead of buying calls because the premiums are sooo high but if the stock tanks tomorrow I'll have to move fast to close these positions.

I'm not a fan of the ITM call. I actually modeled this exact price scenario earlier today:

http://www.teslamotorsclub.com/show...Term-TSLA-Price-Movements?p=405323#post405323

 

[hershey101]

I'm not a fan of the ITM call. I actually modeled this exact price scenario earlier today:

http://www.teslamotorsclub.com/show...Term-TSLA-Price-Movements?p=405323#post405323

Yea I saw that today morning, unfortunately I made the purchase 2 minutes before the close yesterday expecting an up day today, and didn't have enough time to do the appropriate research b/c I was at work .

 

[emupilot]

I bought the $100 as a DITM call replacement strategy yesterday considering that the dip yesterday was a good thing. Now w/ the stock so low, I'm considering rolling up the strikes to something more speculative and moving out to a future month. Any thoughts?

Aside from participating in options in the first place, I'm not very brave. I usually like DITM (though some are less deep than they were yesterday) because of low premiums and because their movements track the stock price closely. Speculative OTM buys don't really work for me because I get twitchy and sell at the first sign of big profits rather than letting it ride to try to get big speculative returns. (A good problem to have...) I like the longer expirations because I don't like being at the whim of external events or short-term stock price manipulation. If the earnings report goes well, I'll probably start selling my Sep 2013 calls tomorrow and maybe move more into Jan 2014.

The run-up will need to slow down at some point - I hope my strategy of increasing my holding on the dips and selling after run-ups will be well-suited for TSLA being volatile but not having huge net gains in the second half of 2013. I should point out that I'm using tax-deferred funds for investing, so buying and selling don't come with tax consequences for me.

 

[justdoit]

So any advice/strategies for offloading some calls tomorrow?

 

[ongba]

So any advice/strategies for offloading some calls tomorrow?

what strikes and what expiration?

 

[justdoit]

Aug 17's between 155-170 and Sept 21's 185

 

[ongba]

Aug 17's between 155-170 and Sept 21's 185

Depends on how aggressive you want to be. If you are gung-ho, you can wait a couple days before selling to see if their is going to be a short squeeze due to margin calls. If somewhat more conservative, you can a) sell 1/2 your calls when they double to secure the initial amount risked or b) sell higher strike calls against your call equal to what you paid for your original call, again, securing your original risk capital and creating a risk free bull call spread. Remember, all options after earnings will experience volatility crush tomorrow.

 

[augkuo]

Thanks for the ideas!

sleepyhead's great analysis made me buy more today. Anyone care to weigh in on the following positions:

+2 $100 Aug '13 call @42.7
-1 $130 Sept '13 put @8.15
-1 $155 Sept '13 put @21.21
-1 $135 Jan '15 put @36.54
-1 $145 Jan '15 put @42.77

The last two seem like too far out to be any good. I have been selling puts instead of buying calls because the premiums are sooo high but if the stock tanks tomorrow I'll have to move fast to close these positions.

 

[clmason]

Suggestions for strategies to exit August 17 Calls? Just 10 days until they expire.
I have 110, 115, 125 & 130 strike prices. This is my first time trading options....

 

[mershaw2001]

I'm in the 140's, i'm going short in after hours if it hits 160 and tomorrow i'll either exercise the option to flatten it out, or buy/write and have the brokerage flatten it out in the backroom.

 

[surfside]

i'm totally new to options as well; i have one (better than none!) december 150 call and one december 160 call. obviously plenty of time between now and december (including another earnings release / conference call), but would still be interested to hear people's thoughts on the timing of selling these.

thanks in advance,
surfside