Showing posts with label BAC. Show all posts
Showing posts with label BAC. Show all posts

Thursday, 3 April 2014

NYSE&NASDAQ: March options virtual trades

Mar 14 options virtual trades, expired 21 March 2014.

Mar14 virtual trade

1. BAC, return of 33% while the mother share rose 1.2% in that particular period. (magnified power of options, just like call warrants)

2. JPMorgan Chase Co. (NYSE: JPM), advanced US 3++ in 1 week, or 5.93%. I bought the option at $0.98 and it ended up with $3.60. A return of 267% in 1 week time, not bad right? This is the kind of return in US markets.

3. TSLA, a recently hot stock in NASDAQ, where the call option is out-of-money @ strike price of 250, i.e. options expired worthless. A loss of 100% of the capital. 

Not too bad when you are a buyer and you bought at the right trend - unlimited profit and a limited loss of 100%. In real trade I would chose those expire at least 2 months later, so that the price fluctuation will be lower. Still a lot to learn for this financial derivatives.

Wednesday, 12 February 2014

NYSE: Buying call options: basic things to know

2 cases of call options are considered:

1. in the money: A call options is in the money when share price > strike price (opposite to put)
2. out of money: A call options is out of money when share price < strike price

Case 1: Out of money

Buy: BAC JanWk5 17
 (NYSE: BAC, Bank of America Corp)
Strike price = $ 17
Expired date = 31 Jan 2014
Cost: 0.13/options = 0.06*1000 = $ 60 + ($ 15.35 brokerage)
MSFT cloased at 31 Jan 2014 = $ 16.75

BAC price at 30 Jan 2014 = $ 16.93. As a call options buyer, I anticipate the share price to be higher than $ 17 on the expired date. This did not happen, so my premium is collected by the seller. The call options expires worthless.

Case 2: In the money

Buy: BAC JanWk5 16
Strike price = $ 16
Cost: 0.13/options = 0.87*1000 = $ 870 + ($ 15.35 brokerage)

This call options is most probably to be in the money, as BAC share price is higher than the strike price. Essentially, I paid a premium of  $ (16 + 0.87 - 16.81) / $ 16.81 = 0.4% as compared to buying the mother share directly. This is very much similar to buying call warrants, however, call warrants in Malaysia are all cash settlements, i.e. does not have the option to convert to mother share. 

Note: $ 16.81 is BAC opening price on 30 Jan 2014.

On 31 Jan 2014, this call options was exercised, so I can buy BAC mother share @ $ 16. 

BAC closed @ $ 16.72 on 10 Feb 2014. If I sell the mother share yesterday @ $ 16.71, I would make a profit of 0.71/share from the mother share = $ 710.

Then my net profit is
 = - $ 870 (call options) - 16000 (stock assignment @  $ 16/share) + 16710 + (brokerage)
= - $ 150

If I wouldn't want to incur any loss, I can hold BAC to wait the share price to go up until it breaks even my cost.

Monday, 12 August 2013

NYSE: Options being excercised

Options exercised后,买 put option 权利把 options 变成母股。这样只要目前股价 < strike price,都是值得的。



BAC put options


比如上面,我8月2了 put options,premium 130左右。但是的 put options strike price 是 15,可是上个星期到期日时候 BAC (Bank of America Corporation) 股价才 14.45。BAC Share Price.意思就是 put options 的 buyer 可以用 14.45 股票,然后用 15 我。必须以 strike price 股票。所以户口出现 500 unit  BAC 母股。

当然,立刻母股价差。算上卖 premium的,还是不过,手上握有 BAC 母股,随时可以翻盘。