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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Dec 13, 2010 10:19 PM Flag

    Buy The Shares vs Options?


    You did a nice job for Olee with your example but some of the zero's are wrong:

    "Each contract equals 100 shares, so you have to buy a minimum of 100 x $3.80 or $3,800." He would pay $380/contract

    "You can buy more out of the money, like the March 29's, which are $1.10. So, that would only cost you $1,100 for 100 calls"

    Technically those Mar 29's are less ITM(in the money) than the Mar 26's not more OTM(out of the money) because they are both ITM since their strike price is less than the PPS. Finally,each call costs $110 x 100 = $11,000 for the 100 contracts in your example.

    Hey my math was wrong yesterday. Thanks for sharing and making me feel better ;-)

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