Option Newbie Question:

[ashantt]

Can someone please explain this to me Please.

If I put this order in below to buy one July 13 call at 95 strike. When do I lose or make money?

Is it if CL goes over $97.00 anytime before July? and what if it goes to $99 and then back to $87 before July, what happens then.

thanks.

 

[smile]

Here's a chart of the July CL contract:

http://quotes.ino.com/charting/index.html?s=NYMEX_CL.N13.E&v=d3&t=l&a=50&w=1


Here's a chart of the CRUDE OIL Jul 2013 9500 Call:


http://quotes.ino.com/chart/index.html?s=NYMEX_LO.N13.9500C&t=l&a=&w=&v=d3


Notice how the 95 call value fluctuates with the underlying contract.

Your breakeven is CL at 97 because you are paying $2.00 x 1000=$2000 for the call option.

As the price of CL fluctuates before the July expiration the 95 call option will also fluctuate in concert with it.

 

[Crude Man]

Quote from smile:

Here's a chart of the July CL contract:

http://quotes.ino.com/charting/index.html?s=NYMEX_CL.N13.E&v=d3&t=l&a=50&w=1


Here's a chart of the CRUDE OIL Jul 2013 9500 Call:


http://quotes.ino.com/chart/index.html?s=NYMEX_LO.N13.9500C&t=l&a=&w=&v=d3


Notice how the 95 call value fluctuates with the underlying contract.

Your breakeven is CL at 97 because you are paying $2.00 x 1000=$2000 for the call option.

As the price of CL fluctuates before the July expiration the 95 call option will also fluctuate in concert with it.

Thanks! meaning if July CL should go above $97 anytime before the expiration then I'm in the money correct?

 

[smile]

Yes.

If CL makes a big move above $97 you may want to sell the call well before expiration so you don't lose the unrealized profit.

As you can see from the options chart the options value changes rapidly and profits can evaporate quickly.

 

[xyannix]

Hi Ashantt,

You may learn a couple things reading this article on Options 101.

http://www.optionsweekly.com/how-to-trade-options-getting-started/

Enjoy the weekend!

Quote from ashantt:

Can someone please explain this to me Please.

If I put this order in below to buy one July 13 call at 95 strike. When do I lose or make money?

Is it if CL goes over $97.00 anytime before July? and what if it goes to $99 and then back to $87 before July, what happens then.

thanks.