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Thread: Simple question about options

  1. #11
    Dr. Dave is offline
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    Joined: Apr 2009 Location: SD Posts: 1,885
    Hi Folks -

    First, I regret getting back to you Tree - I never looked back to this thread - each broker evaluates an application - and for some brokers, there are no set rules - but keep in mind, most people lose big in options - so they likely have a trade off - so if you had $100K in an account and 2 years of experience, you'd likely get cleared, as you would also likely get cleared with $2-5 K in an account if you had 8 years of experience.

    Anyway, I was going over options in our usual market week thread - I guess we could vote over there to keep it in there, or in a fresh thread.

  2. #12
    Dr. Dave is offline
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    Joined: Apr 2009 Location: SD Posts: 1,885
    Quote Originally Posted by bassmaster View Post
    dr dave. this is a screen shot of SIRI options chain for jan 2010. if i think the price will be over a dollar, how do i go about a buy. buy to close buy to open? how many contracts can i buy?

    Attachment 143
    "Buy to open" QXOOA

    Today they were $5 a contract, ie. last was 0.05
    You can buy as many as people write out - in competition with other buyers though. You can see today 1430 contracts were bought and sold.

    Right now, the price is likely below the commission depending on where you are trading. Also - looking at the put contract QXOMA where it's strike is also a dollar, and siri is trading 0.59 below that - you'd figure if SIRI was $1.59 today, the call would be worth around 0.65, or $65. So if you were just in the money (ie. SIRI at $1.00 today) maybe the contract would be worth 0.30 or $30 (so if you had a round trip commissions of $20, that would cut into your $25 gain, and you'd profit $5 per contract) then - by 2010 though, there is a depreciation with time decay, so I have no idea how much the contracts would run by november or december. It would be better to expect SIRI to hit $5 by then, and buy the $1 contracts I bet.

    I also don't or won't play options anymore if it involves a time frame over a week - or even 4 days. It's just too complicated. I also won't play things that are very far out of the money anymore either. ie. if you are far away from the strike a call can actually go down even if the stock goes up, depending on the time frame and distance to expiration.

    In the end, if this is for you to personally buy the contracts and sell them later - I seriously cannot give you advice on how to play it given the time frame and my own analysis of SIRI's prices. It's ten times more work to trade options on a longer time frame than to day or swing trade them.

    If you thought it would hit $1 this week, then I'd maybe have something more to say. I usually just use yahoo to get some quotes.
    Last edited by Dr. Dave; 07-25-2009 at 02:36 AM.

  3. #13
    Dr. Dave is offline
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    Joined: Apr 2009 Location: SD Posts: 1,885
    Ok -
    Here's some insanity.... unless I'm missing something...

    Click on this link:

    Notice that there were contracts sold for strike prices over $1 on the calls -

    Ok - if you thought SIRI was going to hit $10 by january -

    If that were to happen, the $1 calls that you want would be worth a fortune. The $10 calls would be worthless if the price hit never cleared say $9.75 or even looked like it. Any call options on strike prices above would be worth $0. Yet, the prices these guys are paying for the worse contracts (higher strikes) is basically the same for the $1 calls!!!!

    You could just buy the $1 calls and who cares what the price of SIRI is, as long as it shoots way past $1, the higher the better - all these contracts are the basically the same price!

    What the hell, am I missing something!!!!!

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