Option Newbie Question

[ashantt]

I purchased 2 Calls in $KEG last week and the stock immediately started to tank. My question is are my losses fixed or will it continue to increase as the stock sells off?

Here are the details I don't understand:

100 18 APR 19 5 CALL - What does this mean and where would the stock have to go to for this trade to become profitable?

Thanks.

 

[smallfil]

I purchased 2 Calls in $KEG last week and the stock immediately started to tank. My question is are my losses fixed or will it continue to increase as the stock sells off?

Here are the details I don't understand:

100 18 APR 19 5 CALL - What does this mean and where would the stock have to go to for this trade to become profitable?

Thanks.

From what I can see, you bought 2 contracts of the KEG April 18 2019 $5 calls of KEG. It is currently worth $10.00 each (bid price) or total of $20.00. How much did you pay for it?

 

[viruscore1]

The 100 maybe number of contracts. You know there 100 shares per contract. If not stop trading options and read an options book.
Your underlying stock price must increase beyond 19.5 (strikePrice) plus your optionPremium before option expiryDate 18April; to profit. That's the simple explanation.
Then there is theta, time decay. If the stock price increases quickly , Profit will occur before strikePrice is reached. I don't have the calc for that off the cuff, i'll let someone else provide the detail calc.
Delta is the amount the option premium will increase per stockPrice increase.
Check investopedia for detail definitions.

 

[ashantt]

The 100 maybe number of contracts. You know there 100 shares per contract. If not stop trading options and read an options book.
Your underlying stock price must increase beyond 19.5 (strikePrice) plus your optionPremium before option expiryDate 18April; to profit. That's the simple explanation.
Then there is theta, time decay. If the stock price increases quickly , Profit will occur before strikePrice is reached. I don't have the calc for that off the cuff, i'll let someone else provide the detail calc.
Delta is the amount the option premium will increase per stockPrice increase.
Check investopedia for detail definitions.

Thanks.

Market change: -0.91
Delta: 53.53
Theta: -1.73

I guess my question was, are my losses fixed or can it keep increasing to an unknown number?

 

[viruscore1]

Thanks.

Market change: -0.91
Delta: 53.53
Theta: -1.73

I guess my question was, are my losses fixed or can it keep increasing to an unknown number?

You can lose 100% if held to option expiry when stockPrice is below strike price. Most cases, never hold long call option to expiry.

 

[FP22]

Close the position and buy a book is my advice. Good luck

 

[JSOP]

I purchased 2 Calls in $KEG last week and the stock immediately started to tank. My question is are my losses fixed or will it continue to increase as the stock sells off?

Here are the details I don't understand:

100 18 APR 19 5 CALL - What does this mean and where would the stock have to go to for this trade to become profitable?

Thanks.

That's the description of the call that you just bought. I don't understand why you would purchase options when you don't even understand its description. The short answer to your question: If the stock doesn't rise above the strike price of your option by their expiration date, you will lose your entire investment in the 2 options. I will let you do your own research to find out what's strike price and expiration date and all the other essential knowledge about option investing.

 

[smallfil]

Thanks.

Market change: -0.91
Delta: 53.53
Theta: -1.73

I guess my question was, are my losses fixed or can it keep increasing to an unknown number?

Option price will keep changing up to the expiration date. Your loss or gain would depend on how much you paid for it! Who knows what is going to happen but, it you are way out of the monies, chances are good, you will lose all your monies! Option bid price is $15 now, you are up to $30 in current value.

 

[ashantt]

You can lose 100% if held to option expiry when stockPrice is below strike price. Most cases, never hold long call option to expiry.

Meaning, 100% of what I paid for the options, which cannot be more than $400 or so right? But it cannot go more than that, like a stock where the losses could be unquantifiable?

Thanks.

 

[viruscore1]

Meaning, 100% of what I paid for the options, which cannot be more than $400 or so right? But it cannot go more than that, like a stock where the losses could be unquantifiable?

Thanks.

Yes 100%, you cannot lose more. You should read a book, take a class. It'll fast track your option learning process.