TALK ABOUT BULLISH ! For those who don't know options are traded in 100 share lots,that amounts to 1,205,000 shares. This stock is HOT,HOT,HOT
Sentiment: Strong Buy
yes I noticed..and the 20 calls had heavy volume too. These options can't ne excercized unless the share price is $35 or higher. These options will appreciate in value as the share price increases. Can the option inself be sold at a lower price than the strike price? I dont see any advantage over buying the stock. Could anyone who know please explain?. I'm obviously new to options. I bought one call at $10 stike price with jan 2015 expiration just to force myself to learn options.
I just bought some $35 Jan 2015 calls for $1.55. Yes, options can be sold on their own well before the strike date. For example, if ACAD continues to appreciate and reaches, say, $25/share next month, the $35 Jan 2015 calls should rise as well. Let's say they rise to $3. I can sell at that point nearly doubling my money, whereas if I bought the stock today and sold at $25, I'd make only about 25%. That's the advantage of options. It's like buying the stock at much lower price, with much higher variability in price. A $1 swing in the stock itself isn't much, but if that translates into the price of the options, you're looking at a very nice gain (or very big loss). I've learned this the hard way. But I have a lot of faith in ACAD management to continue to deliver over the next year and a half (which I would absolutely have to sell) and believe we continue to rise on good news.
Best case scenario: We're over $35 well before Jan 2015. But even if that doesn't happen and we get to only $25 well before that date, I should see some profit on the options I purchase today.
Sentiment: Strong Buy
I agree, There are some great option traders out there who have written books. I have read several over the years and depending on how complicated you want to get. they are cheap. I would suggest you start out by making a few simple trades and study the intrinsic value as they progress. By buying a strike below the stock price you defeated the very reason many use options in the first place. Options are a way of controling many shares with less money but remember More risk since they can expire worthless and a pre set date versus holding the asset threw a down turn.
you really need to educate yourself on options, not through a message board, but through reading up on the topic. It's kind of lay. Go buy a beginners option book and also look on the CBOE site or numerous other sites that have an options 101, enough already.
"Can the option inself be sold at a lower price than the strike price?"
I don't even know what this means. Read about how an option price is composed of premium + intrinsic value. Any option at a strike above where the stock is currently has 0 intrinsic value and is 100% premium. In this case the $35 strike calls have a time value to them, options market is saying that by 2015, stock very well could be above 35 and there is value to that possibility, hence they don't trade at 0. The premium reflects volatility and other external factors like a possible future event.
Your statement "i don't see any advantage" makes no sense either. If one is to believe that ACAD will be far above $35 on Jan 2015, buying that call provides immense leverage. Imagine stock is at 50 by then, the calls will be worth 15, or 10x the value today and stock is worth 2.5x. Obviously not worth anything if below 35 by jan 2015 but remember you can trade options at any time before expiration.
Typed more than I wanted to, options can be very dangerous due to the leverage aspects creating wild swings. Pls trade cautiously and read up.
Funny how the other option posts disappeared!
January 2015 open interest from optionclearing corp
Jan 2015 7 30,684
Jan 2015 10 1,468
Jan 2015 12 15,088
Jan 2015 15 42,363
Jan 2015 17 124
Jan 2015 20 12,216
Jan 2015 22 204
Jan 2015 25 335
Jan 2015 27 0
Jan 2015 30 34
Jan 2015 32 10
Jan 2015 35 12,103
Jan 2015 37 0
When it comes to options I feel like Schultz on Hogan's Heroes.... "I know nutting!"
But this seems like an obvious bullish sign. Thanks for finding / sharing.
How does one know if this is one investor making a big bet or the accumulation of many? Is that possible to tell with options? Or is it because The volume for that day is so big and far out (Jan 2015) that we can assume it is one investor...not sure it matters, just curious. thx
All you can do is assume that because the prior days open interest(uncleared contracts) is 180 calls and Fridays volume was 12,050 calls, that there is someone with big money that is interested in this particular contract. It's more likely that one large bid of $1.40 was met with one or more sellers accepting the bid, than the other way
Like a lot of things, the hard part of understanding options is the language used. But some very big investors use options to hedge their positions, as well as to speculate on stock movements, so sometimes a valuable insight can be gained into what the big money is thinking. For that reason you should learn the basic's of options
Sentiment: Strong Buy