Timeline for Buying an option in the money, at the money, or out of the money
Current License: CC BY-SA 3.0
11 events
| when toggle format | what | by | license | comment | |
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| Dec 2, 2011 at 17:26 | comment | added | Ray K | Johnny - I'm curious, have you considered owning a long term option underneath, deep in the money (i.e. low time premium), instead of the security? It gives a lot of leverage, but it seems too then one needs to help insure if the underlying goes in a direction one doesn't want. Would love to get your thoughts on it. Thanks, Reto P.S. can email me too, at Reto2 at cox period net, but if you do, please throw a quick comment here and I'll reply to you from my main email, thanks. | |
| Nov 18, 2011 at 13:19 | comment | added | Johnny | Ray, I don't know weekly options... I'm from Brazil and I'm not used to those options you mentioned, however I could invest on a foreign stock anyway... I'll look into it.. thank you very much! | |
| Nov 17, 2011 at 16:26 | comment | added | Ray K | Great Johnny, I get it. Thanks so much for explaining it. This sounds like a good strategy, since if the stock should increase in price, you can roll out the option in a way that is profitable. Have you tried this with weekly options? You've probably noticed, but just in case, CBOE added lots of weekly options in the last 1.5 years, e.g. SLV, GLD, APPL, HAL, etc. Full list here: cboe.com/micro/weeklys/availableweeklys.aspx. For some reason finance.yahoo and finance.google don't show these correctly. | |
| Nov 17, 2011 at 16:19 | vote | accept | Ray K | ||
| Nov 17, 2011 at 11:35 | history | edited | Johnny | CC BY-SA 3.0 |
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| Nov 17, 2011 at 0:57 | history | edited | Johnny | CC BY-SA 3.0 |
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| Nov 17, 2011 at 0:06 | comment | added | Ray K | Johnny, your English is very good! :-) I just didn't understand the scenario in step 6. I assume you are trying to correct for step 5 (bad situation). When you say "at the time the stock hits the strike", is this $9.00? If so, won't you have to pay a lot to buy this option (back) now -- the $9.0 strike option -- since it is right at the money? | |
| Nov 16, 2011 at 20:30 | comment | added | Johnny | Thanks for the comments Ray K. I'm sorry for my confused answer. English isn't my born language and I'm not used with the financial vocabulary. I'll edit my answer to make it clearer. | |
| Nov 16, 2011 at 18:16 | comment | added | Ray K | Also, per your first line/comment, isn't one paying the most (time value) for options at the money, when buying them? | |
| Nov 16, 2011 at 17:50 | comment | added | Ray K | Thanks Johnny, I'm a little confused with part 6. Can you expand / clarify? | |
| Nov 16, 2011 at 12:13 | history | answered | Johnny | CC BY-SA 3.0 |