Newbie option question

F

failed_trad3r

Options trading traffic is heaviest at the April $40 strike where more than 6,000 in-the-money calls changed hands by 10:30 am (ET). It looks like some traders may be taking profits by selling 2,100 of the calls, while other bullish players are buying into the rally by picking up 2,600 lots for an average premium of $1.46 apiece.

Investors initiating long call positions stand ready to accrue profits if LULU¡¯s shares rally above the average breakeven price of $41.46 ahead of expiration day next month. The overall reading of options implied volatility on Lululemon is down 21.1% to 37.60% with one hour behind us in the trading day.
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This site says if you have stock at $40, and buy option at 1,46, breakeven is 41,46.

Is that true?

Well as an option newbie i thought isnt an option worth 100 shares not 1 share? Also what about the option commission which is usually $1-2?

AM I right?:confused:
 
Quote from failed_trad3r:

This site says if you have stock at $40, and buy option at 1,46, breakeven is 41,46.

Is that true?

Well as an option newbie i thought isnt an option worth 100 shares not 1 share? Also what about the option commission which is usually $1-2?

AM I right?:confused:
More...

Options are often quoted as though they are one - i.e. saying 1.46 means $146 or one hundred fourty-six dollars.

So, if the stock goes to 41.46, the option will be worth $146 at expiration, thus breakeven.

Also, many people don't include commission costs in their examples (which is good IMO) because commissions can vary and certainly can make examples harder to understand.

JJacksET4
 
Quote from JJacksET4:

Options are often quoted as though they are one - i.e. saying 1.46 means $146 or one hundred fourty-six dollars.

So, if the stock goes to 41.46, the option will be worth $146 at expiration, thus breakeven.

Also, many people don't include commission costs in their examples (which is good IMO) because commissions can vary and certainly can make examples harder to understand.

JJacksET4
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ah i see.. that makes things alot clearer now, thanks!!:) i thought something was different
 
hello all,

i'm not trading frequently options. i have this problem:

i wanted to put a buy and a sell option order on a stock put market.

i'm not allowed to post orders on both side, why?


another problem: it's a low strike price, total value: 170usd buying, 185 usd selling, commission: 8usd isn't it too much, is there a less expensive provider for options?

tia
 
Quote from pikkpakk:

hello all,

i'm not trading frequently options. i have this problem:

i wanted to put a buy and a sell option order on a stock put market.

i'm not allowed to post orders on both side, why?


another problem: it's a low strike price, total value: 170usd buying, 185 usd selling, commission: 8usd isn't it too much, is there a less expensive provider for options?

tia
More...

Only market makers have the privilege of making a two-sided market.

$8 for 1 contract is very expensive, and yes, there are many brokers that offer a lower rate.
 
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