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Calling all Options Traders. I have an Options question Rate this Topic:
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placilla
Posted : Wednesday, September 23, 2009 3:17:53 PM
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Joined: 9/18/2009
Posts: 5

I bought the 17.50 January call for .87. I was thinking what a great deal and then it hit me. Did I buy what I though I was buying? After a closer look, what I bought was "Buy Call to Open 10 Contracts CALL MERRILL LYNCH 85 BAC + CASH JAN 17 1/2 (LEAP 10) at Market Day". I call my broker and all they could tell me was that I bought 85 shares of BAC + 13.71 cash per contract and that’s all they could tell me.

Principal and commission came out to 904.95. If I am doing the math correctly BAC needs to hit 18.40 to break even. Am I right?

If not, can someone explain to me what the hell that I buy.

Thanks

intothetrade
Posted : Wednesday, September 23, 2009 7:07:39 PM
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Joined: 8/19/2009
Posts: 170
first of all..  you mentioned 85 shares of bac and im not sure where that comes into play when you said you bought the jan 17.50 for .87

there are a few factors that come into play when were talking about options but if youre planning on holding it until expiration... then YES.. it has to hit 18.40 to break even

if you factor in movement and volatility RIGHT NOW, it doesnt have to go as high as 18.40 to break even if it happens before expiration...
ron7331
Posted : Thursday, September 24, 2009 11:46:24 AM
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Joined: 2/22/2006
Posts: 4
You bought bac call at .87  for a Jan 10  17.50 call kpvay. The stock was at $17.50 when you purchased it therefore the .87 is for all time. The Theta for the option is .0085. therefore its time decay is .085 for each 10 day period. The Delta is .5216 which means the every time the stock moves .10 the option should move .05.
This assumes the volitiity says the same. The market maker can change any of this at his will.  In other words in the next 10 days if bac goes to 18.00 your option should increase .25 for  delta and decrease .085 for time.
cornel1810
Posted : Sunday, September 27, 2009 1:12:11 AM
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Joined: 9/27/2009
Posts: 10
QUOTE (intothetrade)
first of all..  you mentioned 85 shares of bac and im not sure where that comes into play when you said you bought the jan 17.50 for .87

there are a few factors that come into play when were talking about options but if youre planning on holding it until expiration... then YES.. it has to hit 18.40 to break even

if you factor in movement and volatility RIGHT NOW, it doesnt have to go as high as 18.40 to break even if it happens before expiration...


Can't buy 85 shrs - 1 contract is a minumum - that is 100 shrs

Someone is really confused.
traderm30
Posted : Sunday, September 27, 2009 9:55:11 AM
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Joined: 1/12/2009
Posts: 235
Get lost looser.
sailnadream
Posted : Sunday, September 27, 2009 9:56:43 AM
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Joined: 2/19/2008
Posts: 193
No name calling please. 
placilla
Posted : Monday, September 28, 2009 2:55:22 AM
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Joined: 9/18/2009
Posts: 5
QUOTE (traderm30)
Get lost looser.


Now I’m really confused, are you calling me a LOOSER?  I don't want to start anything, but I'll like to know why you consider me a looser?  I am beginner trader and had a question about what I was being told. From what I have read I knew one contract equal 100 shares. That’s why I was confused and figured that this would be the place to get some answers. 
 
TRADERM30, a gold customer, didn’t your mom ever tell you that “If you had nothing nice to say, don’t say anything at all”. 
 
Thanks those that responded to my question.
tobydad
Posted : Monday, September 28, 2009 7:55:49 AM

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Joined: 10/7/2004
Posts: 2,181
Placilla;

Because you are new (and Welcome, by the way), you wouldn't know about the background with some trouble makers here. Now we are seeing just how devastating it can be. 

Traderm30 was, I'm sure, speaking to cornel1810, who is really a previous forum member masquerading as someone else. He comes here for no reason other than to berate and belittle. 

Please forgive all of us for what appeared to be a rudeness to you. Traderm30 has never had an unkind word that I have heard for any reasonable person.
Tiger1220
Posted : Monday, September 28, 2009 3:43:52 PM

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Joined: 4/13/2009
Posts: 122
I belive traderm30 was referring to the post above him by cornel1810. There was no direct comment to you placilla. After you have been here awhile you will understand  more as to cornel1810/bigblock.
sailnadream
Posted : Monday, September 28, 2009 3:46:56 PM
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Joined: 2/19/2008
Posts: 193
This is just one good reason not to resort to name calling.  Keep  it clean!
hiromj
Posted : Monday, September 28, 2009 8:05:46 PM
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Joined: 1/30/2009
Posts: 267
QUOTE (placilla)
QUOTE (traderm30)
Get lost looser.


Now I’m really confused, are you calling me a LOOSER?  I don't want to start anything, but I'll like to know why you consider me a looser?  I am beginner trader and had a question about what I was being told. From what I have read I knew one contract equal 100 shares. That’s why I was confused and figured that this would be the place to get some answers. 
 
TRADERM30, a gold customer, didn’t your mom ever tell you that “If you had nothing nice to say, don’t say anything at all”. 
 
Thanks those that responded to my question.


I believe Tobydad and Tiger1220 are correct. There is some bad history here that occasionally decides pop his head in and insult everybody. To be honest, because of the time zone that I live in, I have the opportunity to see all of Big Block's posts before they get deleted (he only posts late at night when the moderators aren't looking) and I find them to be amusing.

So please Placilla, continue to post and ask questions. 99.5% of the members here are great people and will help you any way they can. Just ignore the garbage and everything will work out fine.

placilla
Posted : Monday, September 28, 2009 8:22:30 PM
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Joined: 9/18/2009
Posts: 5
Traderm30,

Please accept my apologies; I thought the comment was meant for me. I tried to delete my comment, but I couldn’t do it. Next time I won't be so quick to jump the gun.       
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