Wattie
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Fabulous...you tempted?Yes, during London market hours, there is an active secondary market.
Fabulous...you tempted?Yes, during London market hours, there is an active secondary market.
Fabulous...you tempted?
Excelllent Goldi-nolocks, and the confirmed two extreme bears (Maseratigent and Froddy)No. I am an extreme bear. I an see us -20% on indices over the next 2m.
@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
If that happens are you talking hundreds or thousands of %?No. I am an extreme bear. I an see us -20% on indices over the next 2m.
@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
Translation/- this thing is so F3cked it makes three hundred percent look cheap.No. I am an extreme bear. I an see us -20% on indices over the next 2m.
@Contigo - options (puts) on the major equity indices. There is a finite cost to buy them and that is the most I can lose. However, their P&L is non linear. The worse things are the faster they make money - but on expiry date your max profit is the intrinsic value (strike price - settle price). Health warning: they are dangerous instruments however unless you know them well.
Wattie, in response to your question, options are leveraged products. In the US system (which I trade, and I'm not familiar with the UK system - if that's what MG is trading), one option represents 100 shares of the underlying. They are priced according to their intrinsic value and extrinsic value.T
Translation/- this thing is so F3cked it makes three hundred percent look cheap.
WARNING- get out of your long position pension fund.
$100 pp would be the max return. To reduce risk (and cost) I generally enter at a 70 delta which would produce $70 pp. If the price goes in my favour, the delta increases as the option goes deeper ITM. As I sit here now, my BA delta is 79.58 and it's down $9.81 with a profit of $810 for the day.So basically you are shorting Boeing stock on a $100 pp level.
If that happens are you talking hundreds or thousands of %?
Honestly I have no idea what you’re on about.Wattie, in response to your question, options are leveraged products. In the US system (which I trade, and I'm not familiar with the UK system - if that's what MG is trading), one option represents 100 shares of the underlying. They are priced according to their intrinsic value and extrinsic value.
So, in my case, one of my options is a Boeing put at a $345 strike price, expiring on the third Friday in March. I paid $1,800 for that option when the stock was trading at c. $331. The option therefore had an intrinsic value of $14 x the 100 shares = $1,400; the remaining cost is the extrinsic (time value). So I have spent $400 in "premium" to buy the opportunity for the stock to decline during the rest of the option's life. The deeper into the money you go, the greater the "delta" of the option. This is the rate of change in value of the option for every dollar that the stock moves. So, in my case, the delta on that option is 82. This means that the first dollar that Boeing declines will generate a profit of $82 and, as it declines further, the delta will increase to a maximum of 100, at which point the profit would be $100 for every dollar decline in the stock. On the flipside, if the price increases, I will lose the delta equivalent for every dollar the price goes against me. On top of that, option values depreciate with the passage of time (if you are buying as opposed to selling an option), and appreciate if you are selling. This is called theta decay. In my case, if BA does not move at all, I will lose $12 per day initially, and then this will accelerate into expiration until all the "premium" is lost; the option would still retain its intrinsic value, though.
MG has bought OTM puts, which have no intrinsic value; however, if price declines as anticipated and go ITM, they will pick up intrinsic value very quickly. As they had no intrinsic value at the point of purchase, they should have been relatively cheap. The percentage profit depends upon many variables, but I suspect it will be in the upper hundreds if not thousands.
In my case, I hold an OTM butterfly spread on the S&P which expires in May. I paid $219 for it last year; the max profit on that spread is $24,785 if the SPX closes at 2,000 points on the third Friday in May. The spread will start to profit below 3,000 points for now (it's called a "broken wing" butterfly, which is a type of custom butterfly spread which you can create).
Hope this makes sense! I appreciate it's confusing - as MG says, you need to know what you're doing!
Mr Froddy you were bang on the money and deserve some applause. This is why traders with knowledge are good.....Worth their weight in gold some would sayFroddys posts are technical- I don’t understand 2/3rds of them but don’t let that put you off.
His analysis pinpoints certain events and timings in the market that have the potential to move shares or commodities up/down. Time will tell what the action is......and that will often depend on news/events worldwide.it can also depend on the players involved in a particular commodity/stock. Ie a big bank on the wrong side of a trade may try to move the market.....dare I say manipulate....as has happened in the past.