This strategy is explained at the bottom of the article. I state the theo value is $10 per contract. Assuming I could get the rights to anything above $7.50 on 100 shares of this for $10 versus buying 100 shares for $680 my cost of opening the call position would be less than 2% of buying 100 shares. Although I am more likely to lose 100% of my investment (if it doesn't get over the strike price) it is only $10 compared to if the very volatile stock goes down.
On Jun 29 08:11 AM ArtfulDodger wrote:
> Macro Hickey wrote: "I have also started using a new strategy as > this stock can move down very fast and although I can lose 100% of > my investment it is less than 2% of the risk of buying the common > shares and watching the stock go to zero." > > Said what?
Yes sorry for not being more clear. A 7.50 Call contract gives me the right to the shares (100 per contract) at $7.50 until the July options expiration. In return I pay a premium for this "right". The theoretical price or the theo value is the most probable value you could open or close the contract for. This splits the bid/ask price, and as I wrote this article the ask was $20 per contract and there was not a bid ($0 per contract); think of it as averaging the bid and ask prices.
On Jun 29 09:05 AM Shale Gas wrote:
> "I have been speculating with this stock by purchasing the July 7.50 > Call contracts. The theoretical price at which they can be purchased > is $10 a piece." > > Can you please explain this statement?
5 Reasons to Buy Gulfport Energy [View article]
On Jun 29 08:11 AM ArtfulDodger wrote:
> Macro Hickey wrote: "I have also started using a new strategy as
> this stock can move down very fast and although I can lose 100% of
> my investment it is less than 2% of the risk of buying the common
> shares and watching the stock go to zero."
>
> Said what?
5 Reasons to Buy Gulfport Energy [View article]
On Jun 29 09:05 AM Shale Gas wrote:
> "I have been speculating with this stock by purchasing the July 7.50
> Call contracts. The theoretical price at which they can be purchased
> is $10 a piece."
>
> Can you please explain this statement?