You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Easy option money?
- Thread starter jonbig04
- Start date
Quote from options4me:
If you think the stock will go further down or stay neutral, use the Bull put, opposite if you think the stock will go up.
Read this:
http://en.wikipedia.org/wiki/Credit_spread_(option)
What are the real prices and expirations of the stock and options?
Go ahead and bend over as you will get pounded playing this suckers game with big boys.
Quote from jonbig04:
Hey guys. I trade the NQ and don't deal in options at all and my knowledge is limited on them. A friend of mine posed a scenario to me that I can't debunk. It seems too simple and easy and in my experience, when that's the case you are missing something. So please let me know whats missing in the following scenario. I changed the stock and price amounts, but its a mirror image of the one he proposed to me. He is getting signed up now so he will be probably be the one who comes back.
Anyways
A deeply in the money call option for the month of november is $10.00 (this is the middle ground between the current bid/ask)
Another option at the same strike, but for the december is $10.50 (middle ground between the current bid/ask)
Couldn't you buy 1 contract of the december option, for $10.50, then sell one contract of the november for $10.00, costing you a total of only $.50 per contract? Assuming you lose 50% due to time value, when the option you sold gets exercised it won''t cost you anything because hold an option at the same strike so you are able to deliver the shares to him. You are then left with all kinds of money.
What's wrong with this scenario?
For a snapshot of what you are looking at you can just go to Yahoo Finance page. They have the list for option for the stocks.Quote from junglerott:
What are the real prices and expirations of the stock and options?
Most eqiuties expire on the 3rd Saturday of the month. That means the last trading day would be the 3rd Friday close.
Index options (SPX, NDX and so on) would expire on Fridays open.
Thursday close would be the last tradeing allowed.
Do some studing on how to trade options before you start trading, unless you like to give away your money...
Quote from options4me:
For a snapshot of what you are looking at you can just go to Yahoo Finance page. They have the list for option for the stocks.
Most eqiuties expire on the 3rd Saturday of the month. That means the last trading day would be the 3rd Friday close.
Index options (SPX, NDX and so on) would expire on Fridays open.
Thursday close would be the last tradeing allowed.
Do some studing on how to trade options before you start trading, unless you like to give away your money...
I'm all set with trading options, I was asking the original poster for the numbers he and his friend used so I could help explain why the trade he is putting on won't turn a profit. The only way I can see it possibly working is if the stock drops and the NOV call ends up losing more time value than the DEC and he closes them out for a profit. If they are deep in the money,and the NOV gets excercised, he will lose.
Quote from jonbig04:
A deeply in the money call option for the month of november is $10.00 (this is the middle ground between the current bid/ask)
Another option at the same strike, but for the december is $10.50 (middle ground between the current bid/ask)
this does not sound right, 10 vs 10.5 for nov/dec? How ditm are we talking about, what is the underlying trading at?
Also you said your friend went ahead and did it anyway. What's his actual fill price on the nov/dec calls? are they really 10 and 10.5?