I bought 100 contracts of JEF Jan 15 calls for 0.75/0.85 bid ask (paid 0.85) and stock at $11.30. Now with JEF stock at 12.86, a move of 14% in my favor, the options are 0.90/1.05 bid ask. I'm up a whole nickel on a 14% move, what a ripoff!!!
the option MM usually hold the bid and ask price down when the stock make sharp moves in a short period of time. He will hold the price to get a even bid or ask, unless there are huge volume, he can usually take bids off the level II, then he will rematch these trades later, that is how he makes money.
lol jan options are pretty far away, you have to check the delta before you buy, with a delta of 0.333 on his options, the stock is up 24 cents right now. your options should have a 6 cents value of yesterday's close price. or 1/3 of the actual price movement. but if there is no bid, your options usually won't change on the bid side.
dude click on your option chain screen and click on "greeks" then it will tell you the delta.
again where there is no bids on that option, the MM has to lower the ask to catch a bid to creat a market.
you shouldn't buy such a out of the money options unless you are so sure it will make such a big move. now you will sit there and watch it decay away. if you have margin. try to sell two $17.50 calls to get 50 to 60 cents back. I doubt JEF will hit $17.50 by jan.
that just means 1400 contracts changing hands. there are bids but very low bids, as you can see the bids is coming off lower and lower as we speak. If I put a bid in now for 90 cent now, the MM will be able to take my bid out and keep the bid at 75 but actually show that I bought the contract at 80 but everything else remind the same on your screen. that is how MM maniuplate the market, especially when there is low volume. the funny thing is, MM is kind of allow to do that in order to create market for that stock or option. they Naked short all the time.
there is lots of reasons why these option didn't perform like I hoped, and sometimes they don't perform as expected, I've had option prices actually increase in value when the underlying when down in price due to increase in IV. Time decay is not a factor despite what some are saying on the thread, so I'll hang on, the Delta will improve as the stock price moves up a bit more and I think reaction is overblown due to the MF global situation.
your options value is only good as the next bid. sometimes you see on the board that last trade was $1, so you think it's worth a $1? but in reality, if the top bid is only 70 cents, you can only sell it for 70 cents. so don't look at the last trade price, look at the bid and see how many bids on that price. click on your order entry screen and it will give you the current bid and how many bids, the larger the bid size, the more solid that pricing will be. good luck.