Since I donât normally hang out in the options area, I thought I would post an option trade I am making. Bought a put on EXPE just after that 11:30 ramp up. BOT (1) put Nov 50 @ $3.50 Watched EXPE for a while and it seemed to be quite strong today. So... I was getting worried about my put position getting very negative. SO......... I bought 50 shares of EXPE at 51.33 as a hedge. I am going overnight with 1 EXPE Nov 50 put and 50 shares of EXPE long. I think I will make a little money if EXPE shoots off to the moon in the next couple of days. The put should decrease in value at a slightly slower pace than the stock price rises. But it is really only a hedge. Lets me stay with my put through this wiggle. I should make money if EXPE falls on hard times in the next couple of days. If I do nothing and EXPE falls, the put will increase in value progressively faster than the half lot of EXPE stock will decrease in value. If EXPE looks to be faltering, I will take off the stock at a small profit and let the put do it's work. If EXPE does nothing significant in the next few days, I will have to find a spot and get out before time decay does it's dirty work on the put value. That the theory anyhow. In summary: 1 EXPE Nov 50 put @ $3.50 50 EXPE long @ 51.33 Any thoughts from the options regulars? All this high finance is tough on me.. (1) put, 50 shares.. wow. But you gotta learn somewhere... Gotta luv IB too.
why didn't you just short an ATM call and buy the stock?? ....................................or an ITM call.............................?? just curious. i am a very bad options trader. i gave it up, and started making more money than i lost.
There is no edge in what you did; you gave up the spread and hedged .... And; where did you get your delta?
Bung, I like IB because I can do these things for cheap. Doing things cheap is the best way to learn. Mwtooxx, In case you didn't notice, I don't have much of a clue exactly what I am doing. I have never tried to hedge a position before. This started out as a straight "buy a put". But EXPE looked too frisky, so I hedged it. It may well turn out I should have simply sold my put and closed the deal out. Anyway, that is why I have such a large position on...
TonySD I trade equities only, and was wondering how this is working out? Looks like EXPE is up about 1.50, and your put is down less than a dollar. Keep us posted (pun intended)
OK.. My first foray into options hasn't worked out exactly according to Hoyle, but everyone starts somewhere. The first 2 trades that I closed out today could have been even or mayby just a teenie winner IF I had been paying closer attention. I have put on a couple of additional positions. One bear spread on BAC, we're fat below 65.00 at expiration. I went short OMC at 60.00, and protected it with a Nov call at 60.00. Hope OMC tanks big next week. Here are the positions.
I would think he assumed the delta of an ATM option to be .50. And; you know what happens when you ASSume.