Well, . . . . . . . . . . . .
don't kick me for admitting this Westwoodguy, but I'm 100% invested in options. I'm realizing I need to stop doing this before it stops me. I need some rest finally from this hectic guessing game. It's been fun, kind of, but emotionally tiring mostly. To say it's had it's ups and downs is an understatement (up 640% in 4 mo to -70% in 2weeks (subprime - ouch) to break-even finally at last)
I'm not sure what options you are referring to specifically, but out of the money options often get beat up quickly on sell offs. It could also be that the volume was too low on the options and they are actually worth more. Check out the Bid and Ask prices at the close to see what they are really worth.
Time value for October is still there but declining. Looks like about a $4 premium on in-the-money calls. I think this was about $5-6 last week.
My advice with options is to try to recoup your initial investment as fast as possible and then let the rest ride for a while, so buy at least 2 contracts.
This is part of the reason why I sold my position today.
The option sellers (usually the big boys) will take this stock down to make all the calls expire worthless. VMW may not fall very far, but enough to kill the option buyers.
It's called time decay. Your options have two parts, the value of the underlying and time. Of the two, time is the one that will separate you from your money - as you're finding out. If you don't understand why your options went down in value today, you shouldn't be playing with options!!!
WOW u guys don't read....
Have one idiot who know's what option I bought today keeps yelling Sept 85s Sept 85s.
And now another that's blames a 40% drop on time decay when only 1 hour passed.
You two are worthless. The news out of VMWare about Chambers might have hit the mark.
As I stated idiots I didn't know why the drop on no news. Now I guess there was news....
40% drop on 1 hour Time Decay bWWWHAAAA that's priceless....
Most folks who don't do well trading figure that they'll do better with options. Don't ask me why but they do. I think it's because they figure if they could just control a 'large enough' position, they can make money. Well, if you can't make money with a small postion, you aren't going to make it by 'going large'.
Then there's that whole 'defined loss', 'limited risk' stuff they always talk about with options. Combine that with the illusion of 'big money' and you've got a perfect vehicle to separate fools from their money.
Here's the real deal with options. The people who make the most money, the people who make consistent money, are the people who WRITE options, NOT the people who BUY options. For average folks like you and me, the best way to play with options is with covered calls - sell calls on stock you own. Other than that, stay away until you can consistently make money holding/trading stocks or you'll end up like our friend here - being taken to the cleaners by the big boys.
look all you un-informed, it is this simple:
If the VMW stock that you bought Sept 85 calls on and paid $3.00 for are trading at less than 85 in 10 days (expiration) you will lose everything. If the stock is trading at 88 you will break even. If the stock is trading at 91 you will have doubled your money.
I sold the $hit out of the 85 calls today knowing that I will be able to pocket the entire premium since they will expire worthless
Hey dipshit this was an across the board kicking out of IV on no news. Yes I bought Oct/Jan at 12 and with the stock trading at same price 1 hour later the options were down 40% other 25%. sorry buddie but in 8 years i've never seen them destroy value so quickly on no news, stock flat and day after huge volatility.
I love to learn new things, Thanks for the help. It's always best to take the loss and do better next time. That it costs so much is a tribute to your lack of caution in new experiences. Until you learn to play hard you are better off watching and learning.
that's what happens when you buy out-of-the money options that are nearing expiration. Truth is that out of the money option are really worthless until they become in-the-money. So basically are worth what someone is bidding for them. Looks like the Sept 85 bids were dropped/options sold. Probably because people finally came to their senses and realized that the 82ish print was an all time blow-off high, and 85 will never happen. Especially when you have a stock that EMC bought for around $1.25 a share selling for $80.00 and trading at 25 times revs. All in all, this is just one big retail buyer hose job
Yup, I've learned my lessons playing with options a while back with GOOG. These option writers are so greedy - they padded with so much premiums. Unless the stock continues to go up, the options will continue will go down. Those assholes pocketed all your hard earned $$$.
The good news is, we have 7 more trading days for Sep and plenty of time for Oct expirations --- and VMW will continue to go up.