When premium income is collected

Quote from FullyArticulate:

I show a last for the May 120 call (expiring in 18 days) on coffee as .85. That trade may have occurred early in the day, and I compute fair value as 1.00 given a reasonable IV. But, let's just assume it's $.85.

So, you buy that 120 call for $.85. You'd actually pay $375 x $.85 = $318.75.

Same with yen and silver--just multiply the price times the contract multiplier to compute your premium. (There are several different yen and silver contracts, so I don't know which ones you're looking at)

An 1445 ES call went for $18.50 last. So, $18.50 x 50 = $925 premium
More...

thanks for the illustration. however my question was pertaining to futuresources option quotes and other sites that put multiple zeros and decimals in front of the price making it difficult to calculate. they always show zeros and decimals in front of the option premium prices.
in particular, i like using futuresource because they have the option quotes for all the futures and puts and calls in one table rather than have to go to diffrent websites for the individual exchanges. also, many quote services also put those decimals and zeros in front of the price and its real confusing. when you get the chance check out http://www.futuresource.com/quotes/options.jsp?s=SIK07&r=SI
the silver options i am talking about are the regular 5000 oz comex silver options. as of the close of 3/26 the may 15.25 calls are selling at a premium of "0.020". so how would i calculate a number like that to figure out the cost of this option?
if you can also check out http://www.futuresource.com/quotes/options.jsp?s=JYM07&r=JY
the may 8750 japanese yen futures calls are selling as of the close of 3/26 at a premium of "0.00330" how would i calculate the value of that one? the zeros and decimals are confusing. let me know if you can figure it out.
thanks.
 
Quote from triggertrader:

they always show zeros and decimals in front of the option premium prices.

as of the close of 3/26 the may 15.25 calls are selling at a premium of "0.020". so how would i calculate a number like that to figure out the cost of this option?

the may 8750 japanese yen futures calls are selling as of the close of 3/26 at a premium of "0.00330" how would i calculate the value of that one? the zeros and decimals are confusing.
More...

“Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime”

I've given you all the information you need to compute the option premiums on those. The results are quite simple given the illustrations from my previous post.

"zeros and decimals" can hardly be confusing to someone trading. Silver trades in 1/10th of a cent increments. What's confusing about 0.001 being 1/10th of a cent? If silver trades at $5000 per full point, and the minimum tick is 0.001, what is the minimum price increment? $5000 x 0.001 = $5
 
Quote from FullyArticulate:

“Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime”

I've given you all the information you need to compute the option premiums on those. The results are quite simple given the illustrations from my previous post.

"zeros and decimals" can hardly be confusing to someone trading. Silver trades in 1/10th of a cent increments. What's confusing about 0.001 being 1/10th of a cent? If silver trades at $5000 per full point, and the minimum tick is 0.001, what is the minimum price increment? $5000 x 0.001 = $5
More...

look i appreciate all your help but if you dont know the answer thats fine and i respect that. you have halped far more than you could have wanted to in the first place. much appreciated.
when you see a yen option premium with a price of 0.00330 and you are trying to figure out the cost of that premium i think that is very difficult to understand. i wish this was fishing. all i would need is a hook line and sinker. with this i have a bunch of zeros and decimals and im trying to figure out what this will cost me. all i would need a simple illustration. the option prices are in futuresources website. they are the largest quote service for commodities in the world. calculating an option with a price of "0.00330 for the japanese yen is difficult. i dont see how you have given me information on how to calculate that.
thanks anyway.
 
Quote from triggertrader:

look i appreciate all your help but if you dont know the answer thats fine and i respect that. i dont see how you have given me information on how to calculate that.
More...
What is the multiplier for the yen contract?

If you buy a yen contract for .008543 and it goes up to .008544, how much did you make?

If you can answer that question, you can answer how much the premium is for your option. If you can't, you REALLY shouldn't be trading the yen.

Hint-- The answer is right here:
http://www.cme.com/trading/prd/contract_spec_JY2466.html
 
Quote from FullyArticulate:

What is the multiplier for the yen contract?

If you buy a yen contract for .008543 and it goes up to .008544, how much did you make?

If you can answer that question, you can answer how much the premium is for your option. If you can't, you REALLY shouldn't be trading the yen.

Hint-- The answer is right here:
http://www.cme.com/trading/prd/contract_spec_JY2466.html
More...

thats how to calculate your profits when you buy an outright jap yen futures contract. the point value is 12.50. you just multiply the point value times the points that you made. thats simple. 12.50 is an easy number. no zeros and decimals in front of it. its the options premium prices that have all those decimals and zeros. take a look at the option prices http://www.futuresource.com/quotes/options.jsp?s=JYM07&r=JY
look at all those zeros and decimals in front of the price. how do i go about multiplying that times the point value?
take a look at the 83.00 put. you see a premium price of "0.00015" so they say "multiply the point value by the premium. ok here it is 0.00015 times 12.50 = 0.001875. what is that?
you're the expert you tell me.
 
$12.50 is the $ value per tick.
.000001 is the tick size.

So, a contract move of .000001 = $12.50

$12.50 / .000001 = $12,500,000

$12,500,000 * .00015 (your example option premium) is?

...
On ES,
$12.50 is the $ value per tick
.25 is the tick size

So, a contract move of .25 = $12.50

$12.50 / .25 = $50

...
I just remember the $ value per full point. ($12.5M for yen, $50 for ES). You can then multiply any option price by that to get the premium in dollars.

You should really get comfortable with this math before you do any trading. Otherwise, you may stumble into a contract with a dramatically higher risk than you're expecting. You'd hate to end up with a $10k loss instead of a $100 loss because you misplaced a decimal point.
 
Quote from FullyArticulate:

$12.50 is the $ value per tick.
.000001 is the tick size.

So, a contract move of .000001 = $12.50

$12.50 / .000001 = $12,500,000

$12,500,000 * .00015 (your example option premium) is?

...
On ES,
$12.50 is the $ value per tick
.25 is the tick size

So, a contract move of .25 = $12.50

$12.50 / .25 = $50

...
I just remember the $ value per full point. ($12.5M for yen, $50 for ES). You can then multiply any option price by that to get the premium in dollars.

You should really get comfortable with this math before you do any trading. Otherwise, you may stumble into a contract with a dramatically higher risk than you're expecting. You'd hate to end up with a $10k loss instead of a $100 loss because you misplaced a decimal point.
More...

no. no way you see my point? the option premium quotes are a huge mess. in a japanese yen futures contact its a piece of cake. the point value is 12.50. if i buy a japanese yen futures contract at 8500 and it goes to 8510 and i sell it i make $125. i profited 10 points and its 10 points times 12.50. no decimals or a bunch of zeros in front or back. simple and easy. with options its totally diffrent. as i have said in the case above where you have options quotes such as "0.00015" versus 1 simple point intervals in futures contracts. its alot harder to calculate.
let me tell you this. i have contacted tradingcharts.com. they are a major charting service for futures and optins quotes. they have the same quotes but even use diffrent decimals and zers making it more confusing. they gave me some illustrations but on whole numbers and they were very confusing. none with the desimals and zeros. i contacted them again and they dont get back to me. i contacted futuresource as well but they only have an auto reply email. maybe i will call them.
i totally agree with you. you cant trade any security when you cant figure out the calculation. and i definetly dont have this figured out. i guess i better do what most taders do. that is to call their broker and ask them to calculate it for them.
 
Quote from FullyArticulate:

$12.50 is the $ value per tick.
.000001 is the tick size.

So, a contract move of .000001 = $12.50

$12.50 / .000001 = $12,500,000

$12,500,000 * .00015 (your example option premium) is?

...
On ES,
$12.50 is the $ value per tick
.25 is the tick size

So, a contract move of .25 = $12.50

$12.50 / .25 = $50

...
I just remember the $ value per full point. ($12.5M for yen, $50 for ES). You can then multiply any option price by that to get the premium in dollars.

You should really get comfortable with this math before you do any trading. Otherwise, you may stumble into a contract with a dramatically higher risk than you're expecting. You'd hate to end up with a $10k loss instead of a $100 loss because you misplaced a decimal point.
More...

that option is out of the money and is definetly not worth 12,500. u see what i mean? its confusing. and it doesnt have to be. they can leave the zeros and decimals out and allow you to easily calculate them but they dont. its rediculous and makes no sense.
 
Quote from triggertrader:

that option is out of the money and is definetly not worth 12,500. u see what i mean? its confusing. and it doesnt have to be. they can leave the zeros and decimals out and allow you to easily calculate them but they dont. its rediculous and makes no sense.
More...

I really don't see what the problem is.

Japanese Yen futures contract is for 12,500,000 JPY.

1 point = $.000001 per Japanese yen = $12.50 per contract.

So an option trading at 0.00015 is $1,875.
 
Quote from triggertrader:

if i buy a japanese yen futures contract at 8500 and it goes to 8510 and i sell it i make $125.
More...

Yen calendar spreads can be quoted in halves. If you remove decimal points entirely, you have 85005 as half way between 8500 and 8510. Doesn't make much sense.

Some data vendors quote corn in cents per bushel (400 1/2). Others quote it in dollars per bushel 4.00 1/2. Others decimalize it 4.005.

You should be able to recognize what the "native" pricing is, and convert. Native (that is, the price quoted by the exchange) pricing for Yen is .000001. If you get a price of "8500", your data vendor is modifying the correct values for the sake of easier display.
 
You must log in or register to reply here.
Back
Top