Options question

[WorldNumberOne]

Verasun is trading at 17.60 right now.

I can buy a Feb 15 call for 2.10

Does this mean that I break even if this stock is trading at 17.10 by the 3rd Friday in Feb. ?

Anything over 17.10 is profit ?

Another question would be , if this stock hits 18.50 on next Monday or any day for that matter , I could exercise my option and buy 100 shares for 15.00 and then sell them for 18.50 . Making 350.00 - 210.00 for the premium . Profit of $ 140.00

Am on the right track here ?

 

[SSI]

i cant offer advice on stock options.........

only commodities......

 

[JNZM]

You are correct in theory

Your understanding and numbers are correct. In reality, you will not find stocks whose options are trading at a level where exercising them would generate an immediate profit. There are far too many computer models and option-savvy programs out there that would make this scenario impossible to find.

But you've got the right idea!

 

[Tchocky]

I hope you got those calls at $2.10; they are trading at $2.80 -$3.00 right now.

 

[WorldNumberOne]

I hope you got those calls at $2.10; they are trading at $2.80 -$3.00 right now.

about 45 minutes after i posted this question the price went to 2.95 .

 

[SSI]

WNO

are you going to look into commodity options?

 

[WorldNumberOne]

WNO

are you going to look into commodity options?

right now i'm learning all i can about stock options. i went and picked up 3 books this weekend and have been reading thru them for the past 3 days. i find it very interesting.

commodities is something i know less than nothing about. everything you post in your daily log is like trying to read chinese for me.

you might as well be writing it upside down .

maybe one day i'll understand it just a little bit.

 

[SSI]

WNO, thats what i tell people all the time........

its not that hard and commodities move much faster than stocks.......

keep reading......... look forward to your comments.......

 

[WorldNumberOne]

any educational tools you know of for commodities ?

good books ?

 

[Journeyman]

Have you read Ken Roberts materials, I know some scoff at him as nothing more than a tout, I kniow others who love his material.

Good to see WNO, I was thinking about you and if you were okay, hadn't see you in months....hope all is well.

 

[SSI]

Ken Roberts is a scam and most laugh at him, consider him close to a tout... that is the bad side.......

the good side, he is not a bad introduction for the beginning trader........ and i actually read his stuff, many years ago.........

go to the site........ TFC Free Commodity Charts........

they have a learning center there for new traders.......... they also have a forum, that used to really rock but has tailed off now..........

WNO, you can get into commodities much cheaper than stocks.........

 

[WorldNumberOne]

Have you read Ken Roberts materials, I know some scoff at him as nothing more than a tout, I kniow others who love his material.

Good to see WNO, I was thinking about you and if you were okay, hadn't see you in months....hope all is well.

all is well ...

i just lost interest in participating in the forum .

this part of the forum is the only place i will ever post again.

hope you're doing well too...

 

[WorldNumberOne]

Ken Roberts is a scam and most laugh at him, consider him close to a tout... that is the bad side.......

the good side, he is not a bad introduction for the beginning trader........ and i actually read his stuff, many years ago.........

go to the site........ TFC Free Commodity Charts........

they have a learning center there for new traders.......... they also have a forum, that used to really rock but has tailed off now..........

WNO, you can get into commodities much cheaper than stocks.........

that is part of my reasoning for learning about options. i am not interested in buying shares of stock .

having an option to buy 100 shares for a premium of 100 bucks sounds a lot better to me to than actually buying 100 shares at lets say 20 bucks a share.

i'll check that site.

thanks

 

[Journeyman]

Ken Roberts is a scam and most laugh at him, consider him close to a tout... that is the bad side.......

the good side, he is not a bad introduction for the beginning trader........ and i actually read his stuff, many years ago.........

go to the site........ TFC Free Commodity Charts........

they have a learning center there for new traders.......... they also have a forum, that used to really rock but has tailed off now..........

WNO, you can get into commodities much cheaper than stocks.........

SSI that was my impression too, I felt like his book was worth it for anyone just starting...I'm not that familiar with the industry so I will take your word for it about the bad side of him.

 

[heart222]

hi when stock was at 17.60 you cannot buy a 15 call for 2.10 as that would lock up a .50 profit. you have to see the bid ask which was probably 2.75-285. In answer to question if stock goes up can you exercise and then sell stock. Yes but most dnt as the option usually has a little time premium in it. time premium is the anount over the fair value of the option. if stock is at 18.50 with a $15.00 call the vair value or intrinisic value is $3.50 $15.00 to 18.50 is $3.50. the option is probably seling at 3.60-3.80 so you can just sell the option for 3.60 and pay 1 commission instead of exercising the option pay a commission and then pay another commission when you sell the stock. in addition you can exercise the option saying you want the stock but you can only do it in the a.m. before market opens so you have market risk whereas yopu can sell option at anytime and avoid the market rsk. got it? If not let me know whats confusing and I will try and help. good luck heart222

 

[heart222]

dont laugh but the yellow books like commoditys for dummys is a good beginners book. heart222

 

[joker46n2]

I would recomend reading Barrons news paper. It is weekly and has lots of good information. Each week there is an article called "Striking Price" it usually has good information about options. Keep reading the whole paper and it will start making sence. Good luck

 

[captaink]

what is the web address for ken roberts ? i am a new trader trying to learn as much as i can before i get started

thanks