BAC Option to make 12.5% by next thursday....

Discussion in 'Options' started by burtonridr, Jul 15, 2009.

  1. And I cannot get approved to buy a call through scottrade....

    If you are interested, check out .JLWGB

    You buy the call for $163 with a strike at $10 per share, then exercise the option immediately to pick up 85 shares at $10 each plus $13.75 cash. Its a non standard option, thats why its only 85 shares.

    Then sell the 85 shares for $13.42


    So you pay $163+850=$1013 plus comissions

    Thats $11.92 per share

    Then sell the shares for $13.42, more or less = $1140.70

    $127 profit minus commissions or 12.5%

    I tried to buy the option 3 days ago when it was only $125, I woulda made a killing.... :(
     
  2. rluser

    rluser

    you should note that 1163/85 = 13.68 which looks suspiciously like the share price plus a bit of premium
     
  3. The multiplier doesn't change. You pay $163 for the contract plus 10*100 = $1000 for the exercise or $1163.
     
  4. Be thankful.

    You are not yet ready to trade options.

    Mark
     
  5. Playing that would be a classic rookie move. I do not know exactly the details of the "payment" on the JLW series but what is 100% certain: these are the former MER options. AKA it means it represents more than 100 ordinary shares of BAC, maybe something like 120... (again I don't know exactly I don't trade this stuff)
     
  6. rluser

    rluser

    85.95 shares represented by 85 shares and $13.71
     
  7. The stock market is like your local diner: There are no free lunches

    But they are always willing to roast a newbie :)
     
  8. No I asked my broker, you only pay for 85 shares, not 100 shares.

    Or maybe I'm a dumb ass by false information.
     
  9. Thats true... Anyone have a link to explain the way non standard options work? If I was given false information by my broker I'm gonna be pissed.
     
  10. #10     Jul 16, 2009