Just bought a few puts on TSLA
Are you also short PCLN? I did some put spreads yesterday on PCLN when it broke through 1,000.
This is like watching the Wildebeest migration on the National Geographic channel. Buying above 1,000 is like crossing a river full of crocodiles (or bears). Once the first few buyers have proven that it is safe, then they will all rush in.
I am short the Sept, Oct and Jan2014, 3.00 puts. I am long the Nov 2.00 calls.
I am thinking about adding to my long position by doing the Nov 2.50/3.50 call spread. This could be done for a debit of around 0.52 which would give me an effective pps of 3.02, which is 0.20 below the current price of 3.22
Options is one of the most effective ways to make money in a sideways trending, volatile stock such as DNDN. You need to use any advantage you can to make money in the market. Without the ability to short options, you are essentially being handicapped in your game.
I have accounts in both Optionsfirst and Charles Schwab. I am allowed to sell naked puts and naked calls in both accounts. Optionsfirst is actually part of Scottrade. I had converted my account from Scottrade to Optionsfirst because they did not allow shorting of options, even as an option spread. The only except is covered calls.
If Scottrade still does not permit shorting of options, then you should ask them to move your account to Optionsfirst. Once you have over 25k in your account, qualification to the highest level is no problem.
At yesterday's close of 3.13, the Jan 2015, 3.00 put was 1.48
If you were to sell this put short, you would collect a premium of half the strike price!
Also, you would not have to hold this position until the Jan 2015 expiration. If the pps were to rise by just 2.00, the put could be covered for around 0.35 This would give you a profit of over 1.00
One reason for the low pricing of the warrants could be attributed to the basic principle of supply and demand. As the pps of AIG rises, there will be less demand for the warrants. Investors will not want to pay for so much time premium, especially if AIG is in a bull trend.
Compare the Sept 45 call to the Jan 2015, 45 call. If the pps of AIG were to increase by $5, the Sept 45 call would also increase by around 5.00 but the Jan 2015, 45 call would increase by only 3.45 The Delta effect would be even worse for the warrant.
she is promoting the sell off so Icahn could pick up more shares at a cheaper price?
The warrants will have their max theoretical time premium when AIG is at 45.00
On May 21, 2013 when AIG closed at 44.96, the warrants closed at 18.50
With the warrants now in the money by almost 5.00, they are priced at less than 1.00 above their strike price value.
As the pps rises above 45.00, the warrants will gain intrinsic value but lose extrinsic value (time premium). At the current price, there is now around 14.00 of time premium in the warrants. Due to the large time premium, the Delta will be working against the warrant holder.
If you want a long term leveraged play, think about owning the Jan 2015, 30.00 calls for about the same price as the warrants. You would be paying less than 1.00 for time premium, but would be gaining close to 1 for 1 on the upside.
Most brokers require a minimum account size of 25k before you can sell naked puts. You could get by with a much smaller account size if you were to just do bull put spreads by buying a lower strike put and selling a higher strike put. For example, long Jan15, 0.50 puts and short Jan15, 3.00 puts.
"the calls are 50-60% more expensive than the puts. Does anyone have an explanation? "
Two of the factors used to determine the cost of an option are the strike price and the interest rate.
As the strike prices become more divergent from the pps, the differences will become more pronounced.
As an example, AAPL is now 498.22 If you were to divide the price of the Dec 600.00 call, 5.50 by 600, you would get the cost per dollar of strike. Then multiply this value by 400 and you would get 3.66 which is just 0.01 above the listed price of 3.65 for the Dec 400.00 put. This is extremely close considering I have rounded the pps to 500.
In order to reach 0.60, VXX will have to rise about 5.00 relatively soon.
The Oct 28.00 calls are bid 0.05 / ask 0.20. If VXX is still around this price a few weeks from now, your Nov calls will be almost worthless if forced to sell at the bid.
Have you thought about doing call spreads? If you did the Nov 17/19 bull call spread for a debit of around 0.50, you could make a max profit of 300%. However,the best part of doing a spread would be if VXX does not rise and is at the same price a few weeks from now. You could then close out your spread for around the same purchase price. Thus, you would not have the major loss incurred by owning far OTM calls.
Over 5,700 Oct 3.00 calls & over 10,000 of the Jan14, 3.50 calls traded today. This is a very bullish bet for a stock which is only up 0.05 at the close.
Cramer's recommendation is having a bullish effect on this stock after hours.
Is it possible that some traders had received this information from Cramer during the trading day prior to the recommendation on his nightly show?
If you enter VIX or ^VIX in the Yahoo board and click Look Up, you will get the page for the VOLATILITY S&P 500 There is a lot of option activity under "options".
Has anyone here traded these options?
Here is an interesting read about the relationship between the VIX and the S&P500 with comparison charts. There is also a discussion about trading the VXX.
Go to the scribd site. Insert "Trading Vix Derivatives" in the search window. Then click on the book icon by Russell Rhoads. The free excerpt is about 20 pages long.
I saw it on CNBC. With such a small float and small daily volume, you can expect big moves on any news. There was probably some short covering with this move up. Too bad options are not available for XONE.
War is generally good for the economy due to the huge spending involved. But what are we going to do with Syria after the war has been won. The U.S. is already stuck with Afghanistan and Iraq for over a decade.
Most brokers will require a minimum of 25k in your account before you can sell naked calls and puts. However, you could have a much smaller account if you just want to do option spreads, in your case credit spreads.
Before you start selling naked calls for UVXY, remember that the market can drop much faster than it rises.
On June 19, the low for UVXY was 62.34 The next day, the high was 88.75
And that was just a minor correction.