Showing posts with label MSFT. Show all posts
Showing posts with label MSFT. Show all posts

Sunday, 23 March 2014

NASDAQ: Symantec stock plunged 12%

Last Friday US stock ends lower, with DJI - 0.17%, NASDAQ -0.98% and S&P 500 -0.29%.

I was wondering how come NASDAQ would have fallen relatively extensive as compared to S&P 500. Having observed the trend of NASDAQ recently, this is rather unusual. A look into Wall Street Journal clear my doubts: SYMC (NASDAQ:SYMC) plunged 12% yesterday due to the news that CEO get sacked in less than 2 years.  Related news can be found in Investor place. Symantec, which develops Norton anti-virus, is a well known company for computer anti-virus software. I am using its product currently.

NASDAQ is an index comprises of 100 companies mainly related to technology / health care operations. A list of its components companies can be found in CNBC Nasdaq component companies. You can easily identify some of the well known international companies by just a glance at the component companies: Microsoft, Intel, Adobe etc.

This is what happens when you get to know US market, a greater insight about the companies of which you use their products daily, and also have a sense of how fluctuating US markets can be.

Friday, 7 February 2014

NASDAQ: Buying put options, what should you know?

I traded put options to see what happens to the contract when it expire either:

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

Case 1: Out of money

Buy: MSFT JanWk5 36 Put
 (NASDAQ: MSFT, Microsoft Corp, everybody knows what this company does)
Strike price = $ 36
Expired date = 31 Jan 2014
Cost: 0.13/options = 0.13*1000 = $ 130 + ($ 15.35 brokerage)
MSFT cloased at 31 Jan 2014 = $ 37.84

At the expired date, MSFT stayed at $37.84, which is higher than the strike price, meaning that the options is out of money, i.e. worthless. It was brought to close automatically (zero cost).

As a put options buyer, I anticipate the share price to drop from $ 36.86 (30 Jan 2014) to $ 36, i.e. a fall of 2.3% in 1 day, which is rather a slim chance. The premium is collected free by the seller. Nobody will exercise his right in this case, as it would mean to selling the share @ $ 36 and then buy back @ current market price of $ 37.84, such a stupid action isn't it? 

MSFT options


Case 2: In the money

Buy: MSFT JanWk5 38 Put
Strike price = $ 38
Cost: 0.13/options = 1.59*1000 = $ 1590 + ($ 15.35 brokerage)
MSFT cloased at 31 Jan 2014 = $ 37.84

On 31 Jan 2014, MSFT share price is $ 37.84 < strike price $ 38, i.e the options is in the money, it will be exercised automatically. Hence, I can sell MSFT @ $ 38 to put options seller. But I don't have any MSFT share in my portfolio, this means that I will have to "short sell" MSFT to the seller, causing me to "earn" $ 38*1000 = $ 38.000 by selling the shares.

I need to buy back the share to close my position. At this time, MSFT share is trading at $ 37.84, which means that I earn a difference of $ 160 immediately. But then in purchasing the put options already cost me $ 1590, which means that I actually incur a loss of $ -1590 +  160 + (brokerage) = -$ 1430. As a put options of strike price @ $ 38 is highly possible to be in the money during expiry, which is why the price is so high. Being a put options buyer, I expect the share to go down, but MSFT is going the opposite direction against my prediction. In short, as long as your put options is in the money, you will be required to sell the share at the strike price.

Yesterday, MSFT closed at $ 36.18, due to bad market sentiment few days ago. This means that I will make a profit of $ (38 - 36.18)*1000 = $ 1820 if I close my position yesterday.

Net profit = $ -1590 + 1820 + (brokerage) = $ 230.

This is not surprising, a put options buyer will always benefit from a loss in share price.  Not a bad return in such a short time if the direction anticipated is correct right?

Friday, 9 August 2013

NYSE: Options 学习中

刚刚把上个星期卖得put options close 掉了。

Put options MSFT

8月5日我做seller,卖 MSFT 的 put options。MSFT,就是 Microsoft。当天的 MSFT 母股是大约是 31.80.

我这个 options 到期日是8月16日,strike price 31.意思就是股价跌过31,我亏钱。当天我的卖价是0.17. 买掉后,我会得到premium,从买家手上拿到的premium。

刚刚看到MSFT涨了,我卖掉的put options就跌了。因为我之前卖掉,所以理论上我必须买回来close position。如果不买也可以等到到期自动close。但是万一到期MSFT母股有什么三长两短我就必须用更高的价钱买回我的options。只要当时的价钱高过0.17(我的卖家),我就是亏钱。

而刚刚我用0.08的价钱买回来。所以1股赚了0.09.

事实上,MSFT 昨天的股价波动很大:(资料来源:Yahoo Finance

MSFT Aug 2013

昨天的股价曾经下探 USD 31,也就是我options 的 strike price。所以昨天我打开虚拟账户的时候户口是大亏的,因为昨天options的价钱最高来到0.34:

MSFT Options Aug13

最后第二根红蜡烛,就是2013年8月7日的。中间来到0.34的高价,超过我卖价的一倍。如果那时候我买回来 buy to close, 立刻亏50%。还好MSFT的股价昨天闭市收盘高,所以昨天的options闭市时0.12。今天开始options直接下探0.08,我就close position了。

美股波动很大。得慢慢摸索。