Seeking Alpha
  • Ocean Man
    Sold weekly $150.50 $SPY calls for a gain of 54% intra-day. $0.63 ---> $0.97. http://seekingalpha.com/s/c3z9r
    2/22/13
    Reply (23)
    • Ocean Man: SPY went from $150.97 to $151.45, closing yesterday's gap-down.
      2/22/13
    • Ocean Man: Now they're at $1.10 LOL.
      2/22/13
    • pollyserial: I did similarly, but with 151 calls. I'm still learning how to pick the right option price, why did you pick 150.5 and where was spy then?
      2/22/13
    • adawg304: polly - what was your entry price and what was SPY when you bought (I'm guessing the break-even was higher than OM's trade)?
      2/22/13
    • pollyserial: I went long 151 SPY weekly calls at about 151 (.30) and then added at about 150.85 (.22), sold for .60 at around 151.5.
      2/22/13
    • pollyserial: Took the sting off from not selling the rest of my April SPY and IWM puts yesterday. Of course I held them from Tues. so it's not so bad.
      2/22/13
    • pollyserial: Will be tempted to get back in if we see 151.3 again....
      2/22/13
    • pollyserial: Going to hold off I think, and go eat some lunch and enjoy the day. GL!
      2/22/13
    • Dr. Kris: Congrats, OM! The major problem w/weeklies is that you have to be right right away. Ever consider binaries?
      2/22/13
    • pollyserial: What are binaries?
      2/22/13
    • adawg304: not bad!
      2/22/13
    • Dr. Kris: re: Binary options. Basically you're either betting on red or black. http://bit.ly/TNTZo8
      2/22/13
    • Ocean Man: Well, you got a higher % gain than me Polly. Strike choice depends on how much you want to risk vs. how much time value you think you can
      2/22/13
    • Ocean Man: overcome. I paid 16 cents of time value thinking I could get a 50 cent move, and I got 34 cents gain on the 50 cent move. You paid 30 cents
      2/22/13
    • Ocean Man: of time value and got 30 cents on the 50 cent move. If it had gone down, I would have lost more, but if it had just stayed at 151, you would
      2/22/13
    • Ocean Man: have lost more. So it's kinda hard to judge the true risk, it's good to study the outcomes of different strikes across different scenarios.
      2/22/13
    • pollyserial: OK I really need to study up on options pricing. Slowly working my way through a book. How are you computing these time values?
      2/22/13
    • pollyserial: And btw kicking myself for not also picking up some April calls this morning to hold over the weekend. Had anticipated shorting but...nah.
      2/22/13
    • pollyserial: Oh wait, I see. It's current price - strike price + option value. Excellent stuff.
      2/22/13
    • pollyserial: Or rather option value - (price-strike price).
      2/22/13
    • pollyserial: Thanks as always for your insights, example and ideas. I'm enjoying learning this stuff. Happy weekend to you!
      2/22/13
    • Ocean Man: Dr Kris - you're exactly right. This was a play on closing yesterday's gap TO-DAY. Polly - yes, that's the formula.
      2/22/13
    • pollyserial: Dr. Kris, thanks for the link, and I guess I was treating this as a binary play; in that I was prepared to lose the full value. I was
      2/22/13
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