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iShares Russell 2000 Message Board

  • helen.bach helen.bach Jan 15, 2011 8:04 PM Flag

    IWM Put Options

    I bought Jan. 2012 $80 IWM put options on Dec. 27th when IWM was trading at $79.

    IWM is now trading at $80.54 (up 2%), and my options are now trading at $9.02 (down 12%).

    Why have these options declined so much in value when IWM has increased so little in value?

    Are these options a bad investment? - if you were in my position, would you continue to hold them?

    Any serious thoughts or opinions would be appreciated.

    Thank You!

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    • IWM was up .15% today (only a few pennies), but the bid price for my January 2012 IWM $80 put options declined by more than 6%.

      Can someone explain this?

      • 1 Reply to helen.bach
      • bikingpeace Jan 26, 2011 8:48 AM Flag

        i own puts on iwm..
        wall street and the government is against me.
        i own stock in an Israeli company that does bio metric technology to stop terrorist. the day of the Moscow.. bombing the stock drops.
        our government needs to raise the ceiling on the debt
        and if we don't do this the treasury sec says we will go into a depression. bought more puts that day..
        the stock goes up..
        is the market taking your money too?

    • Correction to my message: I meant options are not the right instrument for speculators.

      My advise was solely based on the tone of your first message. You sounded like you were in despair. So assumed tha you are new to options :-)

      No hard feelings. On the contrary, please check margin requirements before you decide to short a stock/ETF. There are lot of other strategies if you are bearish on the market.

      1. Convert your long put to a vetical bear put by selling Jan 2012 70 Put. The net wil be a debit, but your max gain will be limited to (1000-Debit) and max loss will be limited to your debit.

      2. Research on "married call". You are long on a call, but short on stock. Margin requirements are not big, but check on max risk.

      3. Buy inverse ETF or double inverse ETF's.I think it is RWM amd TWM for Russell 2K. This way you dont have to mess with options if you are not comfortable.

      These are not investment advice. I urge to research on various strategies if you are new to option strategies.

      I hope I clarified the ambiguity in my first message.

      Good luck with your trade.

    • I suggest you hold them. I think your ideas is a good one. Give it time and you should be rewarded.

      Think about it. Austerity will kick the market's butt. And then your put options will be a good deal. You made a good decision in my opinion. Those telling you to dump them aren't on your side.

      I have no position. I'm on vacation.

      Good luck.


    • "Options are not priced for speculation".

      Could someone please explain what this means?

      Is it better to short IWM than to buy IWM put options?

      Don't put holders make mre money than short sllers when the value of IWM declines?

    • Unless you are prepared to make adjustments to your positions, you should not enter long calls.

      If you had made money today, good for you. If not, check to see if you can make it a vertical spread and cap your losses. I dont think the risk/reward will be pretty at this point, but you will have a chance to cash out if there is a crash.

      Long call/put strategy will not help you in the long run. It seems attractive for beginners but not anything you can count on.

      OPTIONS ARE NOT PRICED FOR SPECULATION. Premiums are calculated based on time value and volatility.

    • I was beginning to take a beating on mine but today they came storming back and I sold them for a modest profit.Good luck.

    • You should immediately sell those options and not trade any more options until you know the answer to that question. That is options 101. You will be destroyed and not even know why.

    • Time erosion plus the IWM hasn't gone down.You still have plenty of time so I would hold for sure.I believe the IWM is way over bought and way past due for a serious drop.I bought some Feb.put options this week and am not off to a good start but I still have a goodly amount of time so I'm going to hold mine for now.

    • THEY crushed the vol week before long weekend AND at the peek of the 5th wave up.

      NOTHING unusual about that. why u chose leaps IS a choice u did make. since this thing goes back into the 60's atleast BEFORE the pending correction ends

      if it warms u r heart i just loaded up on JAN 80 AND 79 PUTS last week WITH only 4 days to go.

      SO we on the same side of the TRADE lol

      iwm is at yearly pivotal resistance and major confluences of resistances have shown in this zone. iwm yearly support is about 72 ish.

      SO when the volatility lifts IN THE MARKET in a few days to weeks U'LL get some premium build likely.

      ps I DON'T like using long dated puts. NORMALLY it's OKAY CATCHING trend when bullish with leaps BUT WITH puts much tougher to do generally because market spends most of it's LIFE going up EVEN when in a BEAR MARKET.

      this is being witnessed by all right now. STILL A BEAR market but you can't tell anyone it is AND get them to take U SERIOUS yet.

      gl with your trade. I THINK u'll be happy with getting your money back soon and something extra for your efforts.

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