Market Value calculation of option

K

Knutta

Hi, I’m new to options so using the paper mode of Interactive Brokers. I bought one (1) call option of TSLA. Premium was USD 31. Strike price USD 1150. Then the underlying TSLA stock moved to USD 1165 and option premium to USD 41.

All good so far. But then I see that the market value of the position (qty 1) was USD 3 800 and unrealized P&L USD 483.

i don’t understand the market value and P&L calculation.

I thought the profit (if I had decided to exercise) would be USD 1165 (current price)-1150(strike)-31(premium)-2(fees)= - USD 18

I don’t understand how one (1) call option can generate such a unrealized profit (re: P&L interactive brokers) while my calculation is negative.

What is it that I don’t get?

Knutta
 
Knutta said:
Hi, I’m new to options so using the paper mode of Interactive Brokers. I bought one (1) call option of TSLA. Premium was USD 31. Strike price USD 1150. Then the underlying TSLA stock moved to USD 1165 and option premium to USD 41.

All good so far. But then I see that the market value of the position (qty 1) was USD 3 800 and unrealized P&L USD 483.

i don’t understand the market value and P&L calculation.

I thought the profit (if I had decided to exercise) would be USD 1165 (current price)-1150(strike)-31(premium)-2(fees)= - USD 18

I don’t understand how one (1) call option can generate such a unrealized profit (re: P&L interactive brokers) while my calculation is negative.

What is it that I don’t get?

Knutta
More...

the options premium went up. Your option is worth more than you paid for it and so you have made money.
 
You realize you bought TSLA option calls on earnings right?

If they didn't crush it your contract would be completely worthless now.

Earnings calls are usually for gamblers.
 
Last edited:
newwurldmn said:
???

You realize that tesla hasn’t announced earnings yet right?
More...

Ahh, I see that was Q4 deliveries. Either way the premium was likely priced much higher in expectation of the news so he was gambling on the delivery numbers.
 
Last edited:
GotherL said:
Ahh, I see that was Q4 deliveries. Either way the premium was likely priced much higher in expectation of the news so he was gambling on the delivery numbers.
More...

it was not priced for any information on deliveries.
 
newwurldmn said:
the options premium went up. Your option is worth more than you paid for it and so you have made money.
More...

Thank you for your reply. yes, I’m just trying to figure out the P&L calculation. And how the market value of one option can be close to USD 4000 while the underlying stock price is only USD 1165
 
Knutta said:
Thank you for your reply. yes, I’m just trying to figure out the P&L calculation. And how the market value of one option can be close to USD 4000 while the underlying stock price is only USD 1165
More...

the option has time value which represents the cost for having an asymmetric payout. you should study some basic options thery (even wikipedia will be good start).
 
newwurldmn said:
it was not priced for any information on deliveries.
More...
Bro it was priced much higher in expectation of delivery numbers. He bought OTM 1150 weekly calls (approx $100 out from the underlying.) which cost him $3100 a contract. If you look at the 1280 calls currently right now (approx $100 out from the underlying) they're priced at only $800 a contract or less.
 
Last edited:
You must log in or register to reply here.
Back
Top