56% of premium in 2 days

Discussion in 'Options' started by Insurinator, Feb 12, 2010.

  1. Sold an AAPL Mar 10 155 put on 2/9 for .98 and by 2/12 before market close, I have already secured 56% of the premium

    How is it that I've secured over half the premium in less than 3 days of a 38 day contract? The stock has only moved about $2 in my favor.

    Shouldn't the majority of the premium been secured in the following 35 days instead of the first 3 days?
  2. NHS


    IV can be one place to look. IV can really changes prices.
  3. heh you got a lot to learn. :)

    For example you could be short an option that goes ITM and still secure a double digit profit. Whereas the person who went long the option was just betting on direction.
  4. Your March 155 put has a delta of about .05 so with a move of $2 in you're favor, that explains maybe 10 cents of your gain.

    Given you sold the put for 30+ cents more than the puts high print of the day, I'd say that you have a phenominal broker. Or maybe IV spiked just before you sold it and your broker forgot to report the trade for time and sales?
  5. LOL yea he forgot to report it
  6. You have secured nothing until the position is closed.

    Currently, the trade is profitable, but is still alive and nothing has been secured.

  7. Sure any trade can be profitable if you can magically sell the options higher than they traded.
  8. siafx


    I haven’t looked at your particular option, but as has been masterfully pointed out, implied volatility or IV is directly related to the price of an option.

    Some people trade volatility. When IV is low, they buy. When IV is at record highs, they sell options.

    See if your broker offers some kind of chart on volatility. Options Xpress does. The answer to your question may be seen there. Just maybe.


  9. That's worth repeating.

    I would have closed that position before posting here.
  10. How do you close a position which was not really opened?
    #10     Feb 15, 2010