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Royal Dutch Shell plc Message Board

  • retiredguru3 retiredguru3 Jun 20, 2013 1:59 PM Flag

    Options

    Another way to roll options...

    As I mentioned, I sold June RDS 67.5 options. They expire on Saturday. Obviously, I bet wrong on these (didn't think the Fed. would think about changing policy at this time). Anyhow, they are underwater (will have to pay more to buy them than I received when I sold them). So, I will need to roll them before close of market tomorrow. However, do not like the premium the market makers are asking with less that two days to go...so, another method is to let the stock be put to me (I would buy it at 67.50 and keep the premiums that I received when I sold the puts). Then, on Monday, I sell the stock and also sell the July 76.50 puts. Sometimes that is necessary to avoid too much of a premium on the current options (at this point in time, should be able to buy back the puts at market value - no time premium).

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    • Still holding the 67.5 puts I sold - waiting for 67.50...

      About half of the puts were exercised a couple of days ago. That is what can happen when one sells options...however this is not a bad thing...I kept the premium that I received when I sold the puts and now own the stock at 67.5 (so, I am currently ahead on them...67.5 less the premium is about 63.5).

      Could close out the entire trade now at a profit but still think there is upside to this run...so, holding at present...

    • retired.........you demonstrate a lot of guts and honesty. Most blab ONLY about their successful investment gambles, never their losses.

      • 1 Reply to zer0t0l
      • guts? not to sure about that. I just place my bet when it appears to be worth the risk. If I am wrong, then I just have to exercise patience until the price comes back to where I can close the trade for an overall profit.

        With RDS (unfortunately) sideways for nearly the past 16 years, this is not too hard to do.

        I was able to roll my puts late yesterday and this morning (bought the puts that I was short and sold next month's puts). Was able to pick up 20 cents/share in time premium (that is, was able to sell next month's puts for 20 cents more than I bought back this month's puts). Not a lot of time premium, but not negative and ever little bit helps. Now, it is just a waiting game until the share price returns close to 67.50. May have to roll again if don't get this price by mid-July.

        When finally able to close the overall trade, I will pick up the initial premium that I sold the puts for ($1-3/share) plus the additional time premiums each time that I roll. The only advantage of trading options over trading shares is that one controls a much larger number of equivalent shares with the same investment...so, there is a multiplication factor on the gain/share.

 
RDS-A
77.46-0.71(-0.91%)Sep 12 4:01 PMEDT

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