Deep ITM covered call
- Thread starter dojibear
- Start date
Gee, you really want to be long a rising wedge, up nearly 30% in just a little more than a couple of months?
Check out the lack of volume recently, no new money flowing in that bad boy.
Check out the lack of volume recently, no new money flowing in that bad boy.
For example,
GEUF is at 1.70, with k= 30.
the current price is 29.45.
Thus your maximum ROR would be
7.64% return, which is clearly greater than your other strategy.
if it expires worthless than your profit would be 1.70 less the difference between current price and future price,i.e. GE has to decline 5.77% as the breakeven point. (Could some check the math
).
However, this goes back to your previous assumption in your first post on the direction of GE.
Hope that helps.
GEUF is at 1.70, with k= 30.
the current price is 29.45.
Thus your maximum ROR would be
7.64% return, which is clearly greater than your other strategy.
if it expires worthless than your profit would be 1.70 less the difference between current price and future price,i.e. GE has to decline 5.77% as the breakeven point. (Could some check the math
).However, this goes back to your previous assumption in your first post on the direction of GE.
Hope that helps.
Metooxx
I was hoping to get some positive comments from you. Thx
"Reasonable play..." is better than "Kid! are you that stupid !??! "
Optional777,
Indeed, I was a bit bearish on GE, that was why I sold a deep ITM and far expiration contract (deep and far... sounds like a porno flick!)
FishSauce,
Like I mentionned, I am bearish, so I wanted a big premium to offset my purchase price, and if GE goes down, it may find support in the 25-26$ area.
Of course, like in all trades, I could be dead wrong.
This was a 'test' trade, I only went for 100 shares/1 contract. The initial idea was that I always wonder why people buy/sell deep ITM contracts.
Cheers !!
I was hoping to get some positive comments from you. Thx
"Reasonable play..." is better than "Kid! are you that stupid !??! "
Optional777,
Indeed, I was a bit bearish on GE, that was why I sold a deep ITM and far expiration contract (deep and far... sounds like a porno flick!)
FishSauce,
Like I mentionned, I am bearish, so I wanted a big premium to offset my purchase price, and if GE goes down, it may find support in the 25-26$ area.
Of course, like in all trades, I could be dead wrong.
This was a 'test' trade, I only went for 100 shares/1 contract. The initial idea was that I always wonder why people buy/sell deep ITM contracts.
Cheers !!