Basic Options Question

Discussion in 'Options' started by PaulRon, Jan 19, 2011.

  1. PaulRon


    If I get an SPY 100 put option for April 11 that is $.31, (and SPY is 128.25 now), does that mean I would make the difference 28.25 if SPY hit 100 by april 11 or, approx 100:1 on my money?
  2. This bit isn't right... It ain't about hitting, but about being there at expiry.
  3. 1) No.
    2) If you were "short" the SPY shares from 128.25 to 100.00, you would earn $28.25 per share.
    3) The SPY/April/100/put would increase in value to where the SPY/April/128/put is now, $4.28 per option, AND HIGHER....because of expected implied volatility expansion. :cool:
  4. No way, no how

    What you might make would depend on when the SPY hit 100. Sooner, you might make 10-20X, depending on what IV does. Much later, much less,
  5. But what if it's a slow gradual decline and it doesn't get near 100 until expiration week? Perhaps what the Jan 128p is worth now? OMG, I got skewed!!!! :eek:
  6. tsaw


    For the your Q if Spy hit 100 by Apirl Expiry , your 100 put options is worthless & you will have lost your 31 cents .

    Starting off in options trading ?

  7. The SPY 100 put option would only have value if the underlying SPY trades below 100 on or before April 11. As the SPY underlying price decreases toward the exercise price, the put option could increase in value less consideration for time decay. If the underlying price stays at or above the exercise price on the expiration date, the option will expire worthless.
  8. tomk96


    is the SPY is trading below 100 by april expiration, there are bigger troubles to worry about. just sell it.