Hi Bruins, sorry for replying so late. Options are much easier and better than people think. First of all its much less money required to control the more expensive stocks. I prefer the longer term because you get time to adjust.For example Disney. 1 option = $100 shares. so an option going for $20.50 means $2050.Add 2 zeros.
100 shares @$144/sh = $14400 tied up
1 option =100 sh @$20.50 = $2050
an option has 3 parts
EXPIRATION DATE =Date it expires . I never let it go that far..Always close out early
STRIKE PRICE = The amount the stock has to hit before you are in the money
PREMIUM = What you pay for the option
in this case
EXPIRATION JAN 2022
STRIKE PRICE $140
PREMIUM $20.50
I am saying that I think that on January 22 2022 that the Disney stock will be over $140 +20.50 = $160.50 if it is not I will lose money I expect it to be over 175
I BOUGHT 5 OPTIONS @ $20.50 SO FOR $$10250 I got to control 500 sh instead of $14400 to control 100 shares. if it hits $175
I will make almost $7300 for a $10250 investment with options or $3000 had I bought sh for $14400 .almost 2.5 times more for 80% of the investment. conversely, if nothing happens I will lose almost all my investment and the stock buyer will still have his full investment. So much riskier but not if you have strong fundamentals. I will try to post some others later in the week.
HAPPY THANKSGIVING . do they have that in Canada?
100 shares @$144/sh = $14400 tied up
1 option =100 sh @$20.50 = $2050
an option has 3 parts
EXPIRATION DATE =Date it expires . I never let it go that far..Always close out early
STRIKE PRICE = The amount the stock has to hit before you are in the money
PREMIUM = What you pay for the option
in this case
EXPIRATION JAN 2022
STRIKE PRICE $140
PREMIUM $20.50
I am saying that I think that on January 22 2022 that the Disney stock will be over $140 +20.50 = $160.50 if it is not I will lose money I expect it to be over 175
I BOUGHT 5 OPTIONS @ $20.50 SO FOR $$10250 I got to control 500 sh instead of $14400 to control 100 shares. if it hits $175
I will make almost $7300 for a $10250 investment with options or $3000 had I bought sh for $14400 .almost 2.5 times more for 80% of the investment. conversely, if nothing happens I will lose almost all my investment and the stock buyer will still have his full investment. So much riskier but not if you have strong fundamentals. I will try to post some others later in the week.
HAPPY THANKSGIVING . do they have that in Canada?
After I bought the options last week they dropped about $800 but they jumped yesterday and were trading @ $22.50 @ market close. I expect another jump as the stock jumped $1.42 in the premarket. The reason for the jump is, even though Disney has lost billions with the parks closed they have made it back with the Disney + streaming service. Reports say that with everyone home with the pandemic, they already have more Disney + subscribers than they projected through the year 2024 when they started the service. You can see all the Star War movies and new films as well..When the parks reopen this will add another 4 billion to the bottom line. Raising my projection from $175 to $190. This will raise my projected income to
$30 x 500 =$15000..not bad for a $10250 investment.. May buy the $150 options. I will check the option chain when the market adjusts and advise.
$30 x 500 =$15000..not bad for a $10250 investment.. May buy the $150 options. I will check the option chain when the market adjusts and advise.
Hey Metfan, are you selling calls against the options you bought for extra premium? I know its tricky. I got assigned (100 shares) of SQ at $145. I have been chasing up selling the calls, now I have the Jan 15th 230 call sold against this. Its close now.
I was also assigned NIO at $10, now have the 60 calls sold for Jan 15th. The option premium was so rich on these guys that going way out of the money pays pretty pretty good.
Earlier in the year I also bought (2) Jan 2022 $10 contracts of NIO for $270 each. They are worth over $3400 each now. Selling calls against these also.
Been using profits to back monthly puts in NIO.
I am in my 60s and I just started this option trading about 5 years ago. Wish I would have had this fire years ago. Better tools now though.
I was also assigned NIO at $10, now have the 60 calls sold for Jan 15th. The option premium was so rich on these guys that going way out of the money pays pretty pretty good.
Earlier in the year I also bought (2) Jan 2022 $10 contracts of NIO for $270 each. They are worth over $3400 each now. Selling calls against these also.
Been using profits to back monthly puts in NIO.
I am in my 60s and I just started this option trading about 5 years ago. Wish I would have had this fire years ago. Better tools now though.
NO... IT MEANS that on June 17th I have the right to buy 100 shares per option of Disney stock for $175. If the stock is below that the option will expire worthless as there would be no reason to buy a stock for $175 if I can buy it in the open market for $170. If this stock is $190 , I can buy it for $175 and either sell it for $190 or hold it. if I sell it, I will lose $1600 as I paid $31 per share on the option.
so in summarizing:My breakeven is 175 +31 =$206 So for every $1 over $206 the stock is worth on June 2022 I will make $100 profit. I will have to pay $17500 per option to exercise the stock.
each option =100 shares
so in summarizing:My breakeven is 175 +31 =$206 So for every $1 over $206 the stock is worth on June 2022 I will make $100 profit. I will have to pay $17500 per option to exercise the stock.
each option =100 shares
