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#321
Sure. Lets use 1 contract for ease of illustration. He bought 1 contract of the $110 strike for $1.85 or $185 (remember, 1 option contract represents 100 shares, so $1.85 times 100=$185). Now he waited for aapl stock price to rise to the point where he could sell the $120 strike for $1.90, or $190. So net result, he spent $185 for the $110 strike and sold the $120 strike for $190, hence he has a $5 net credit, and creates a $110-$120 Risk free bull call spread, which is a 10 dollar spread. His max gain on the spread is $10 (times 100 shares= $1000). If aapl is above $120 at expiration, he gets $1000 and a $5 credit, for a total gain of $1005. If Appl finishes below $110, the spread is worthless, but he keeps a $5 credit, so total gain is $5.
 
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#322
ongba said:
Sure. Lets use 1 contract for ease of illustration. He bought 1 contract of the $110 strike for $1.85 or $185 (remember, 1 option contract represents 100 shares, so $1.85 times 100=$185). Now he waited for aapl stock price to rise to the point where he could sell the $120 strike for $1.90, or $190. So net result, he spent $185 for the $110 strike and sold the $120 strike for $190, hence he has a $5 net credit, and creates a $110-$120 Risk free bull call spread, which is a 10 dollar spread. His max gain on the spread is $10 (times 100 shares= $1000). If aapl is above $120 at expiration, he gets $1000 and a $5 credit, for a total gain of $1005. If Appl finishes below $110, the spread is worthless, but he keeps a $5 credit, so total gain is $5.
Click to expand...

I was actually lucky enough to be able to do something similar today. I had Dec 21 $210's which I had bought for $3.87 a while back. On the run up today I was tempted to sell it but instead decided to sell a Dec 21 $230 strike for $3.88. So if on Dec 21 we close below $210 I still have a gain of $1 per contract. But for every dollar above $210 I will make $100 per contract. So the max gain is $20 x 100 shares = $2000 per contract.

Having said that, I'm not sure how confident I am of TSLA being over $210 come December. So working on a few backup strategies. Any ideas are welcome :)
 
#323
justdoit said:
I was actually lucky enough to be able to do something similar today. I had Dec 21 $210's which I had bought for $3.87 a while back. On the run up today I was tempted to sell it but instead decided to sell a Dec 21 $230 strike for $3.88. So if on Dec 21 we close below $210 I still have a gain of $1 per contract. But for every dollar above $210 I will make $100 per contract. So the max gain is $20 x 100 shares = $2000 per contract.

Having said that, I'm not sure how confident I am of TSLA being over $210 come December. So working on a few backup strategies. Any ideas are welcome :)
Click to expand...

well done justdoit! You have created a delayed construct risk free bull call spread. So in summary, you have a zero cost 210-230 bull call spread and your original capital back. Here are 3 possible actions:
1) since you have your original capital back, do nothing and keep the spread open. If it expires worthless, ie tsla below 210 in dec, the only thing you lost was time.
2) use the $3.88 to begin setting up another spread once tsla corrects (maybe with strikes closer to the money). Thus, if done properly, one can use the same $3.88 over and over again, creating a ladder of risk free spreads of varying strikes and expiration dates.
3) if tsla corrects, buy back the short 230 call for a profit, thus lowering the cost basis of the 210 call. Once tsla rises again, sell the 230 call again to re-establish the spread. Only do this if you are convinced that tsla can finish above the call you own (ie 210) by expiration (ie dec).


given the strikes you chose, I would consider #1 or#2. You can also sell the spread at some pre determined profit point, but please note that the spread moves much slower than the outright call, and gains max value near expiration.
 
#324
What is a good website to find out when new options become available for a particular stock? I am looking for an options calendar of some sort: e.g. if I type in TSLA it will show me that J16 options will start trading on Nov 11, 2013, etc.
 
#327
i sold a couple of leaps today, and made a great profit of 100%. the thing that has me worried is a "market correction" or crash.
While a year and a half seems far away, I am not sure if things go down quickly if the recovery will be as quick as 2008. Anyone else have any thoughts about if there is a correction, will tesla "rebound in time" ie. jan 2015. i am completely new to stocks and especially options, so am happy with my gains (if only i had more purchasing power when i bought them).

...with that said my solar city options are taking a bath. :crying:
 
#328
I'm theorizing here and want to see if my thinking is correct. I bought 1 jan 15 $125 C for $52.1 and one jan 15 $170 C for $33.45. I could do a bull call spread (would this even still be called that) at the current prices by selling 2 jan 15 $165 C for $42.75, netting me a current gain of ~$1400, and it would put ~$8400 back in my account for another buy on a dip? Is there any potential that this would not work out as I envision it. Also is there an added risk with the strike I bought at 170 ruining it because the ones I am stalling are at a strike of 165? Will the $125 make up for any possible losses on the 170? What are the potentials of exiting everything at $150, $168, $180. Are there better scenarios to run to free up some capital for buying on a possible dip next week?
 
#329
Theshadows said:
I'm theorizing here and want to see if my thinking is correct. I bought 1 jan 15 $125 C for $52.1 and one jan 15 $170 C for $33.45. I could do a bull call spread (would this even still be called that) at the current prices by selling 2 jan 15 $165 C for $42.75, netting me a current gain of ~$1400, and it would put ~$8400 back in my account for another buy on a dip? Is there any potential that this would not work out as I envision it. Also is there an added risk with the strike I bought at 170 ruining it because the ones I am stalling are at a strike of 165? Will the $125 make up for any possible losses on the 170? What are the potentials of exiting everything at $150, $168, $180. Are there better scenarios to run to free up some capital for buying on a possible dip next week?
Click to expand...

Let's take each call as a separate position.

1) Jan 15 $125 call purchased for $52.50. Plan to sell Jan 15 $165 call for $42.75. This creates a Jan 15 125-165 Bull Call Spread for net cost of $9.75 ($52.50-$42.75) with max gain of $30.25 (width of bull call spread $165 minus $125 minus cost of spread, $9.75) if tsla is above $165 at expiration with breakeven of $134.75 (strike of call purchased $125 plus net cost of spread, $9.75). If tsla is below $125 at expiration, the loss is $9.75.

2) Jan 15 $170 call purchased for $33.45. Plan to sell Jan 15 $165 call for $42.75. Since the strike sold ($165) is less than the strike bought ($170), this creates a BEAR call spread, not a BULL Call spread. In this case, one gets a credit of $9.30 ($42.75-$33.45) and a Jan 15 165-170 BEAR call spread. In this case, one keeps the entire credit if tsla finishes BELOW $165 at expiration. If tsla is above $170 at expiration, the net gain is $4.30 ($9.30 minus width of spread, $5).

3) use an options calculator (ie thinkorswim) to calculate potential gains at various prices.
 
#330
Have traded options for a long time and am ashamed not to know the answers to the following questions which would help me understand the volatility of the expiration date
. If you close a call by purchasing the stock:
1. What price is the transaction recorded as. I e the strick price the price of shares at the time
2. Is the purchase of stock via exercising options recorded in the volume?
 
#331
ppl said:
Have traded options for a long time and am ashamed not to know the answers to the following questions which would help me understand the volatility of the expiration date
. If you close a call by purchasing the stock:
1. What price is the transaction recorded as. I e the strick price the price of shares at the time
2. Is the purchase of stock via exercising options recorded in the volume?
Click to expand...

1. If you exercise a call, you will be buying shares at the strike price of the call. Your break even price for the shares will be the strike price plus the premium of the call purchased. For example, I had jan 14 $55 calls purchased for $7. If I exercise the call, I will receive shares at $55, but my breakeven $62.
2. Not sure, but would think so.
 
#332
Ran into an interesting conflict with my broker last evening I wanted to exercise some call options. Very deep with very little time increment in the price. It was only 25 cents. Worried that if I sold the options then bought the stock I would be exposed to a tesla type explosive rise in stock and miss out on large increase in stock. As it worked out today I would have lost almost 2 dollars per share while trying to garner 25 cents. They tried to tell me you could not exercise contracts until market open (not true, I have done it twice already including this morning)

My broker, who I won't name but I call him chuck, refused my verbal orders. Told me how wrong I was. That I should risk it to get that time premium. Literally after 4 calls from chuck till close to 1 am, I explained my position that if they didn't follow my orders I would initiated sec cpmplaint and if I lost any money would initiate arbitration to recover those funds. At that point I figured I was in a tails I win and heads they lose position. If I lost money I could recover it from them. I think they realized that and at 8:30 am agreed to follow my orders.


what I really find funny is that I have invested, via options and stock, in a company they have rated F, and have increased my principal by a factor of over 33x the original. I keep getting calls from them telling me how wrong my moves have been, this is the third instance in which I have ignored their unsolicited advise. Yet the attitude is that I am clueless and ignorant. Perhaps ignorance is bliss after all I would caution people from using chuck especially their after hour folks, who do not know very much about their options trading.
 
#333
Does anybody have any good websites that show some different option strategy plans? What I'm looking for is something like 10% in options, of that, 50% short term, the rest long. Sell half the longs when you realize a certain percentage gain, also cut half the longs when there is a certain loss. Just looking for different ideas on how to put a plan together.

Still reading the options Playbook and the AAPL PDF that ongba put together and I'm realizing that it is extremely important to craft a master options plan and stick with it. I think this will help keep things rational. I'm up to mid 2007 in the AAPL doc, and I know what's coming so I'm trying to learn why the posters picked the strategies they did and now I find myself trying to predict who is going to weather the storm that is coming and why. I've also been peeking at the AAPL charts following along with the PDF so I can see some of the trends they were talking about.

In summary a good options trading plan to try to maximize the upside while limiting the downside and protecting the core from an 08 like crash is key IMO. I'd like to see some other plans people put together so I can formulate my own based on my risk/reward strategy.
 
#337
sleepyhead said:
IV must have gone up, because of the high volatility over the past two days.
Click to expand...

It went down, then went back up. I sold some Jan14 $165 covered calls for $20 last week, they are now nearly in the money and I am getting killed on them. I fully expected a pullback to the mid $150 's... I'm down about $8 per contact now. If TSLA doesn't drop, my shares will be sold for $165, plus the $20 I received selling the covered call, $185 isn't bad, of course TSLA could be $200 or more by then. Sometimes selling covered calls is not without some risk :)
 
#338
Can someone explain to me delta in my position? It consist of common shares, leap calls and some protective puts (sept). How is this number different from the delta of an option. Also how are they totaled for my total delta position? I saw someone posted yesterday they had a negative delta for their entire position. Anyone know how that happened? Sorry I forget who posted that comment.
 
#340
Not sure how others feel but I think delayed construct bull call spreads (for short term Sept calls) are really nice when the price fluctuates like it does these days. With so many big swings it's fairly reasonable to buy a call when the price is dipping and when the price rises sell a call with a higher strike price. That helps to minimize risk while still providing a good opportunity for some gains. Thoughts?
 
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