Call options and dividend?

mizhael · Jan 26, 2009

Quote from eminitrader007:

If I have to make a bet on seeing the pigs fly or BAC going to $20 before february, I'll take the pigs.

Well, look, we don't have to see it going to $20 before Feb 20. As long as it goes up a fair amount, then I will be above water, right?

Of course, I know I am losing both time value and volatility when it is going up slowly, due to the characteristics of a option call.

eminitrader007 · Jan 26, 2009

Quote from mizhael:

Well, look, we don't have to see it going to $20 before Feb 20. As long as it goes up a fair amount, then I will be above water, right?

Of course, I know I am losing both time value and volatility when it is going up slowly, due to the characteristics of a option call.

I don't think there is enough time. Even if the stock price doubles by Feb 13th (with 1 week till the expiration), I do not think the option will appreciate much.

mizhael · Jan 26, 2009

Quote from eminitrader007:

I don't think there is enough time. Even if the stock price doubles by Feb 13th (with 1 week till the expiration), I do not think the option will appreciate much.

How did you calculate that out? I'd like to learn. Thanks!

dagnyt · Jan 26, 2009

Quote from mizhael:

Selling Feb 20 means I am losing a huge amount of money, isn't it?

Given the banks rally today, I still have some hope?

You have ALREADY lost a great deal of money on this trade. That is not going to change.

Accept that and move on with your life.

Not every trade can be a winner, and if you continue to BUY options, you will discover that you lose far (far) more often than you win.

You always have hope. But this is one hope that is not going to be fulfilled.

BAC is in trouble and wishing it were not so doesn't change anything.

As I said, your have no position. You are long zero delta. These options are worthless. Do not double up. Do not buy March 30s.

Find a real stock to trade.

Mark
http://blog.mdwoptions.com/options_for_rookies/

KINGOFSHORTS · Jan 26, 2009

Your options will expire worthless. Sorry, you ended up putting money in the option writers pocket.

Curious what date did you buy this option and how much did you pay?

Hopefully this was at risk money that you were not counting on.

Curious what was your reasoning behind that trade?

KINGOFSHORTS · Jan 26, 2009

Quote from stinkyfelix:

Yes he can! Yes he can! Yes he can! Yes he can adjust his position. You are thinking too negatively. Be an optimist!

Here are some ideas to adjust your position:

a. Rollover to the April 20 strike price.

b. Sell the Feb 20 and buy the April 30 strike price. Open interest is over 30k, so the liquidity should be good.

c. Sell the Feb 20 and buy Jan 2010 50 strike leaps. This option gives you more time.

In ObamaNation, anything can happen.... Maybe even a miracle

Bad advice, poor guy is going to lose more money and make the writers richer

spindr0 · Jan 26, 2009

Quote from stinkyfelix:

Here are some ideas to adjust your position:

a. Rollover to the April 20 strike price.

b. Sell the Feb 20 and buy the April 30 strike price. Open interest is over 30k, so the liquidity should be good.

c. Sell the Feb 20 and buy Jan 2010 50 strike leaps. This option gives you more time.

In ObamaNation, anything can happen.... /QUOTE]forget about being an optimist. Try some reality.

Problem #1 is that his calls have a bid of one cent so rolling is ridiculous

Problem #2 is that BAC is on the January cycle so no April options exist and therefore rolling to April is a fantasy

Probem # 3 is that unlike Obama, he can't ring Uncle Benny up at the Fed and tell him to print more money. The money is gone.

spindr0 · Jan 26, 2009

Selling Feb 20 means I am losing a huge amount of money, isn't it?

Given the banks rally today, I still have some hope?

There's no limit to the hope that you can have.
However, probability of success is a real downer.

spindr0 · Jan 26, 2009

If I have to make a bet on seeing the pigs fly or BAC going to $20 before february, I'll take the pigs.

OINK OINK

I don't think there is enough time. Even if the stock price doubles by Feb 13th (with 1 week till the expiration), I do not think the option will appreciate much.

If BAC doubles by a week until expiration, the option might double. And if the spread widens by a penny, he might make a penny from today's price. LOL.

Gee this is a fun filled thread...

nickdes · Jan 26, 2009

Quote from spindr0:

There's no limit to the hope that you can have.
However, probability of success is a real downer.

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Agreed!