LEAPS/major oil stocks

Stadtmuller Von Texas

Stadtmuller Von Texas

I started buying long calls in Feb this year in RDS/A & BP about $5.00 OTM , so far every one of them has been profitable, I continue to sell them when up & try to buy back at a lower price when oil prices fall, about once ever 10 days. I think there is still room for a lot of up direction with oil closing Fri. @ about $46.15. I am moving more toward DITM with Delta @ 90 + on BP strikes $25 & $30 2018. I have a limit order now for 200 contracts BP $30 2018 @ $4.50 bid. I try to calculate Delta backward that is how I arrived at a $4.50 bid. BP would probably have to drop to around $32.50/33.00 to get my order filled. It is fairly easy to place a limit order on the underlying, much more difficult to get it right on long call option bids. Please comment on how I can improve.
Stadtmuller
 
Sounds like you are doing fine. Has the wide markets been costly in entering and scalping the position?

Also, you don't really have to call them LEAPS anymore. They made up that name because every long term option used to have a different symbol than the underlying. With the new symbology, they now longer use alternate symbols. You just change the date.
 
marsman said:
It's unclear what you mean: are short-selling calls or are you buying long calls?
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He said that he buys them and then fades the up moves in the stock by selling some out. Then, bids lower to buy them back.
 
marsman said:
It's unclear what you mean: are short-selling calls or are you buying long calls?
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Mainly long call options, but just with the major oil companies. When I have a good gain I sell & wait for another buy opportunity.
If i bought 20,000 shares of BP today it would cost $700,000 @ Fri close of $36.92. I can buy 200 BP contracts & control 20,000 shares for about $110,000 . BP $30.00 2018 ask $6.35. If oil continues down I might be able to buy @ $4.50/5.00 , that is my approximate bid. May not fill, however it might.
The high delta quickly brings down the bids when the underlying goes down, I don't bid based on the bid/ask but on what it will probably fall to if the underlying fall 10%

Stadtmuller
 
I used to go long DITM calls, and did very well until the oil collapse :banghead:, and a delta of 75 to 80, or very close to it, seems to work the best, IMHO.
 
Oil is definitely coming back up. The hippie/yuppie electric car party doesn't and won't have mass appeal. My friends love their Yukons and Suburbans and find Teslas "cute".

You're making money and have done so with OTM. So obvi you know how the game's played. Stick to it and soon you can buy yourself a 100k acre ranch in big sky country :)
 
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