DNDN Option Help
- Thread starter garage sale
- Start date
We shorted this stock between $19 and $20. What is good about this stock? I did not studied from a fundamental point of view. Why should it be over $20 in the first place? stock like it should go back where they came from.
After April 14th move I wanted a cheap 15/17.5/20 May Bfly but the MM's didn't want to play in my sand pile.
So on 4/14 I put on a 15/17.5 Bull Spread for a Credit of $1.45.
Today I got the 17.5/20 Bear Spread at a Debit of $1.40.
Net cost after commissions was $ 0.60 cents, effectively no-risk. (But I didn't like having to wait six days to consumate the Bfly).
We will see.
Mech
You have a 2.5 point butterfly and it cost you 60 cents. If you consider that to be 'no risk' or even low risk, you are mistaken.
If it cost you 60 cents to get in, what's it going to cost to get out? How are you going to make any money on this play, unless you get a miracle.
You own a high risk (high probability of loss) position with very little to gain.
Mark
Whoa Mark!
Read my post more carefully.
By legging into the butterfly, I received a nickle CREDIT for my position (a $1.45 Credit on one leg of the trade, minus $1.40 Debit on the other leg, giving a net credit of $.05).
Then after broker commissions were deducted from the nickle credit, my actual 'out of pocket' cost for the ENTIRE position was .60 cents. As Obama would say, "To be clear", the most I can lose on the entire trade is .60 cents TOTAL (NOT .60 cents per option).
In a Forum like this it is just too easy to miss the little details when reading posts about Options trades. If one is not paying attention, when someone mentions a cost of $.60 where options are concerned it is natural for the brain to ignore what was posted and to think in terms of $.60 per option position multiplied by 100.
Don't worry, I've wasted a lot of my own time jumping to wrong conclusions about the posts of other people and failing to understand what they were really saying. Probably why I don't post much any more.
Regards,
Mech
I did read it carefully. The nickel credit is no big deal if you paid such high commissions. And that's what I thought had happened.
I apologize for getting it wrong, but - as you mentioned - that's not what most people mean when they say 'net cost after commissions.' It's customary to use the per contract price.
Don't be a stranger.
Mark
Where did you obtain the information that it is impossible to borrow shares of C? Of is it hypothetical?
Excuse me - but are you asking me a question?
Have you forgotten that I'm on your ignore list?
1) It's obvious that the shares cannot be borrowed. If you understood options better, you would know that free money doesn't just sit there day after day.
2) You can call your broker and see if yu are the lucky person who can borrow shares
3) send yourself a pm and see if you have some special information to share.
Mark
stock just fell from 20s area down to 10 dollars area. Closed at $11.81. Low as $7.50.
How is now the idea of writing a call on this stock while sacrificying gains from $5 up to $20?
PS: How about the opinion of that bagholder outhere who did not warn the OP, and he likes to say s/he specializes in options (for losers?)?