| Welcome Guest, please sign in to participate in a discussion. | Search | Active Topics | |
Registered User
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
|
|
Registered User
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...
|
|
Registered User
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.
|
|
Registered User
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.
|
|
Registered User
Joined: 1/12/2009
Posts: 235
|
Get lost looser.
|
|
Registered User
Joined: 2/19/2008
Posts: 193
|
No name calling please.
|
|
Registered User
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.
|
|
Registered User
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.
|
|
Registered User
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.
|
|
Registered User
Joined: 2/19/2008
Posts: 193
|
This is just one good reason not to resort to name calling. Keep it clean!
|
|
Registered User
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.
|
|
Registered User
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.
|
|
|
Guest-1 |