Call options and dividend?

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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.
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How did you calculate that out? I'd like to learn. Thanks!
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Use a pricing model to determine possible future prices. Here's one:

http://www.cboe.com/framed/IVolfram...ADING_TOOLS&title=CBOE - IVolatility Services
 
Quote from spindr0:

Problem #2 is that BAC is on the January cycle so no April options exist and therefore rolling to April is a fantasy
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The April 20s do exist. They are the converted MER. I think at .85? Is that what BAC paid for that overpriced firm. Thain was a great salesman. He robbed Ken Lewis blind...

Guys/gals, all of you have to have a positive mental attitude! The Messiah has arrived! All your problems will be solved.

If you believe, the Messiah can make your way, way, way OTM options spring back to life...

I can see the $$$ now...

Believe! Yes we can! Yes we can! Yes we can!

P.S. the option writers thank you...:)
 
Quote from mizhael:

Yes, I bought the calls after the earning release. So the dividend info has already been priced in. I see.

So far these calls are still under water. Maybe I should do some position adjustment?
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Find God.
 
The April 20s do exist. They are the converted MER. I think at .85? Is that what BAC paid for that overpriced firm. Thain was a great salesman. He robbed Ken Lewis blind...

Guys/gals, all of you have to have a positive mental attitude! The Messiah has arrived! All your problems will be solved. If you believe, the Messiah can make your way, way, way OTM options spring back to life... I can see the $$$ now... Believe! Yes we can! Yes we can! Yes we can!

P.S. the option writers thank you...:)
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ROFLMAO. I'd like to say that I sit here corrected but I won't stand for that!

You're suggesting that a guy who wants to know how to calculate the future price of an option should roll a call worth two cts into an adjusted MER contract comprised of less than 100 BAC shares and cash in lieu of fractional shares?? (eye roll)

As the newly arrived messiah, you should donate time to a non-prophet organization!
 
On a more serious note, the OP should ask himself why he established this position in the first place?

The BAC/MER combined firm will probably continue to report losses and they will need additional capital, diluting the shareholders even further, which will depress the price of BAC stock and related options.

Since the Op bought the Feb 20s, time is nigh and even if the SP500 rallied to the 880 - 900 range in the next 5 to 7 days, the Feb 20s will still be way under water, but he might (I say might very lightly) be able to recover 2 to 3 cents.

With a new Sec. of Treasury, he might announce a new super govt bad bank model ala RTC from the 1980's.

Sit tight, watch and pray for a rally in the financials...
 
Trading options without understanding them is an efficient way to lose money quickly.

I strongly suggest you find software or a website that lets you model positions. Then get a feel for how time, changes in volatility, etc. affect them.

The CBOE learning center has lots of free info on the basics:
http://www.cboe.com/LearnCenter/default.aspx

To include a free program that's not very sophisticated but will get you started:
http://www.cboe.com/LearnCenter/Software.aspx
Quote from mizhael:

Let's say I am long some Feb 20 Bank of America calls.

I just noticed that there will be a dividend coming out for Bank of America.

The Ex-date is Jan 28, and the payable date is Feb. 17.

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COMPANY AMOUNT EX-DATE PAYABLE RECORD DECLARATION
BankofAmerica $0.256 28-Jan 17-Feb 30-Jan 5-Jan

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It looks like my call is definitely going to get crushed. My question is how bad is that going to be and when will that crush occur? On Ex-Date or on Payable date? Details appreciated!

Any sort of remedies that I can do on my side to reduce my loss?

Thanks a lot!
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Since the Op bought the Feb 20s, time is nigh and even if the SP500 rallied to the 880 - 900 range in the next 5 to 7 days, the Feb 20s will still be way under water, but he might (I say might very lightly) be able to recover 2 to 3 cents.
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Well, ya never know. BAC IV could like well maybe double like to say maybe 750 or something, ya know? (Valley Girl stare)
 
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