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Thread: Sirius stock price vs Call Options

  1. #1
    sxminvestor is offline

    Sirius stock price vs Call Options

    Can Sirius presently trading at .14 drop as far as their call options of .05 ?

    I remember I was thinking at .50 cents, it might be less risky to buy Jan '10 - .05 call options.

    So buying Sirius near .10 cents would be like buying call options that only expire if they go bankrupt. Maybe worth a shot on 100,000 shares at .09 cents.

    I think I'll put a bid in there - just another 5K they I might risk, but if it holds off bankruptcy and ever hits $1 again - 100K back in my pocket.

    Not sure if I have the balls or want anymore pain with this stock though.

  2. #2
    Siriusowner is offline
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    Joined: Nov 2008 Location: The Oil Patch, Texas Posts: 922
    If you buy 100000 shares you will risk $14,000 USD. If the price of the stock goes up 5 cents you make $5000 if it goes down 5 cents you loose $5000.

    If you buy 1000 call contracts controlling 100000 shares you risk the premium which is $1000*.05 = $50. If the call option goes up 5 cents, how much did you just make ? NO, not $50, nor $500 BUT $5000 USD !!! If the call expires worthless then you loose... $50 USD !!! only.

    So, what would you rather do ?

  3. #3
    winagain35 is offline
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    Joined: Jun 2008 Location: Denver, CO Posts: 190
    1000 Call contracts at .05 would cost you $5,000... not $50.
    Each contract costs $5 bucks. Not to mention most brokerage firms charge .75 per contract which is another 750 bucks in commissions.
    Last edited by winagain35; 11-22-2008 at 01:52 PM.

  4. #4
    sxminvestor is offline
    My math was wrong - obviously 100,000 shares at .09 is 9k.

    Basically Sirius has become a call option that will only expire if it expires.

  5. #5
    Siriusowner is offline
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    Quote Originally Posted by sxminvestor View Post
    My math was wrong - obviously 100,000 shares at .09 is 9k.

    Basically Sirius has become a call option that will only expire if it expires.
    You were right. My math was wrong too. 1000 contracts = 100000 shares * .05 = 5000 and not 50. BUT either way you risk 5000 or 14000 and either prospect is not good.

  6. #6
    Demian is offline
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    Quote Originally Posted by Siriusowner View Post
    You were right. My math was wrong too. 1000 contracts = 100000 shares * .05 = 5000 and not 50. BUT either way you risk 5000 or 14000 and either prospect is not good.
    People will have to make up their own minds if the prospect is good or not. Just because Siriusowner says that the prospect is "not good", doesn't make it so.....

  7. #7
    Siriusowner is offline
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    Joined: Nov 2008 Location: The Oil Patch, Texas Posts: 922
    Quote Originally Posted by Demian View Post
    People will have to make up their own minds if the prospect is good or not. Just because Siriusowner says that the prospect is "not good", doesn't make it so.....
    ...And now we will have a NEW definition of a good investment.

  8. #8
    Demian is offline
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    Quote Originally Posted by Siriusowner View Post
    ...And now we will have a NEW definition of a good investment.
    What you are talking about?

    Past performance is not indicative of future performance....

    The definition of "unknown" is "not known"......

  9. #9
    Siriusowner is offline
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    Quote Originally Posted by Demian View Post
    What you are talking about?

    Past performance is not indicative of future performance....

    The definition of "unknown" is "not known"......
    You got me lost there... So are you saying you do not know ?

    Ok. Here it is then:

    The most basic rule to follow when making an investment is that a good investment makes you more money than you had when you started and doesn't take up more time than you're willing to put into the endeavor.

    Has Sirius made money to anybody ?

  10. #10
    Demian is offline
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    Quote Originally Posted by Siriusowner View Post
    You got me lost there... So are you saying you do not know ?

    Ok. Here it is then:

    The most basic rule to follow when making an investment is that a good investment makes you more money than you had when you started and doesn't take up more time than you're willing to put into the endeavor.

    Has Sirius made money to anybody ?
    Past performance is not indicative of future performance......

    un⋅known   [uhn-nohn]
    –adjective
    1. not known; not within the range of one's knowledge, experience, or understanding; strange; unfamiliar.
    2. not discovered, explored, identified, or ascertained: the unknown parts of Antarctica.
    3. not widely known; not famous; obscure: an unknown writer.
    –noun
    4. a thing, influence, area, factor, or person that is unknown: the many unknowns in modern medicine; The director cast an unknown in the leading role.
    5. Mathematics. a symbol representing an unknown quantity: in algebra, analysis, etc., frequently represented by a letter from the last part of the alphabet, as x, y, or z.

    http://dictionary.reference.com/browse/unknown

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