I am thinking about buying XLE, USO, and UCO......... (accounts, costs, returns)
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1) UCO's Option Buy to Open Call Jan 23, 2015 last price was: $1.60 for $11 Call. $1.05 for $12 Call. Shouldn't the price be more expensive for $12 call than $11 call?
2) You wrote: "For example, I own 10 Jan 17 $95 calls on Pepsi. Pepsi is currently 95.44, but my options are 1.84."
You own 10 calls meaning you own 10 call option contracts? Which means you can buy 1,000 shares of Pepsi at $95 a share between now and Jan 10. If Pepsi goes to $100 tomorrow, you can "Buy to Close" your 10 contracts and earn $5,000 (1,000 X $5), right?
3) Did it cost you $1,840 to buy these 10 option contracts? ($1.84 X 1,000 shares).
4) When you fill out your option order online, the "Price" for "Buy to Open" for your Pepsi was $1.84, and when you "Buy to Close", the "Price" section, you would put "$100," correct?
I am asking all this because since the market is close now, it's hard to see how it will play out on the TDAmeritrade website.
1) UCO's Option Buy to Open Call Jan 23, 2015 last price was: $1.60 for $11 Call. $1.05 for $12 Call. Shouldn't the price be more expensive for $12 call than $11 call?
2) You wrote: "For example, I own 10 Jan 17 $95 calls on Pepsi. Pepsi is currently 95.44, but my options are 1.84."
You own 10 calls meaning you own 10 call option contracts? Which means you can buy 1,000 shares of Pepsi at $95 a share between now and Jan 10. If Pepsi goes to $100 tomorrow, you can "Buy to Close" your 10 contracts and earn $5,000 (1,000 X $5), right?
3) Did it cost you $1,840 to buy these 10 option contracts? ($1.84 X 1,000 shares).
4) When you fill out your option order online, the "Price" for "Buy to Open" for your Pepsi was $1.84, and when you "Buy to Close", the "Price" section, you would put "$100," correct?
I am asking all this because since the market is close now, it's hard to see how it will play out on the TDAmeritrade website.
1) No because the out of money option has no intrinsic value, the stock is below the strike price, meaning it is worthless right now if it were to expire, which is why you are paying less for it.
2) I never exercise my options, so I wouldn't be the best person to answer this question.
3) The value of my options are $1,840. However, I bought them at 1.49, which cost me $1,490. The math you did was correct if 1.84 was the ASK price.
4) If you "buy to open", you will "sell to close", not buy to close. The buy to open price would be the ASK price and the sell to close price would be the BID price, just like if you were buying or selling shares of stock, except options have their own bid/ask prices.
Quaker, it sounds like you need to read up on options before jumping into the pool. There are some really good books you can find on Amazon or B&N that'll help explain options to you.
Leveraged ETFs generally are NOT good long-term purchases because of the price decay inherent in them. Volatility in the market combined with the daily resetting of leverage will eventually (if not sooner) reduce the return you might expect (in this case, 2x the Dow Crude Oil index). As an example, after two years the oil index might be up, say, 10%, so you might expect UCO to be up 20%. But UCO could actually be DOWN 10% or more, depending on how much volatility there's been to that point.
+1
However, leveraged ETFs make great swing trading vehicles. You can see huge gains if you catch a decent rise/fall in a certain sector. I try not to hold them for more than 2 or 3 weeks.
I just dumped UCO and HAL. The pre-market price action puts them back down into the downtrend range. Could it reverse throughout the day, maybe, but I like almost for sure trades and oil still seems like it is headed lower.
Today, GE cost $25.71. If I Bought the Call Option for GE with the expiration date of Jan 23, the premium for each share is $0.37. 100 contracts = 10,000 shares and it would cost me $3,700. In order for me to double my investment, all GE has to go up to is go to $26.50 within the next two weeks or so, correct?
I just dumped UCO and HAL. The pre-market price action puts them back down into the downtrend range. Could it reverse throughout the day, maybe, but I like almost for sure trades and oil still seems like it is headed lower.
Today, GE cost $25.71. If I Bought the Call Option for GE with the expiration date of Jan 23, the premium for each share is $0.37. 100 contracts = 10,000 shares and it would cost me $3,700. In order for me to double my investment, all GE has to go up to is go to $26.50 within the next two weeks or so, correct?
You didn't say what strike you bought, if it was 26.50 you would need the stock to move to 26.87 to break even before transaction costs
Edit it looks like the 26 strike has a last trade of 0.37. You'd need 26.37 to break even
This reinforces my opinion that you shouldn't be actively trading
You didn't say what strike you bought, if it was 26.50 you would need the stock to move to 26.87 to break even before transaction costs
Oh, the strike is $26. Transaction cost is cheap, right? It's only $0.65 per contract plus trading cost of $4.95. That would be around $70.
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