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Total: 27 results found.

1. Theta Burn: BKE Update and New Trade
(OBB Prodigy!/Theta Burn)
... take advantage of increased IV and sell eight May $6 puts for $298.05 of premium (after taking into account commissions), representing a roughly 6% return over the entire amount of reserved cash to exercise ...
Thursday, 18 March 2010
2. Portfolio Update + New Trade
(OBB Prodigy!/Theta Burn)
... if the stock is at or above $10 per share at May expiration). IV as of today was around 90%, resulting in high premiums. Because I don't mind the possibility of exercise and holding the stock outright, ...
Wednesday, 10 March 2010
3. New Trade - WMT Diagonal Call Spread
(OBB Prodigy!/Theta Burn)
... non-recourse leverage. I pay a time value premium on the in-the-money long options ($1.515 per share as of the close) which essentially represents a borrowing cost for the non-recourse leverage (3% for ...
Friday, 05 March 2010
4. Some Potential Naked Puts
(OBB Prodigy!/Theta Burn)
... pay a high premium for short exposure (I’m not going to be buying outright SPY puts, etc.) believing that over the long term these sorts of moves will weight down my returns. Ultimately, I may decide to ...
Friday, 26 February 2010
5. Introduction
(OBB Prodigy!/Theta Burn)
... strike price and pays a premium to do so (the extrinsic value of the option) but where losses are limited to the premium plus the equity portion (the intrinsic value of the option), unlike margin borrowing). ...
Saturday, 13 February 2010
6. 1.8- LEAPS
(Courses/Freshman 100 Level)
... of the extrinsic value of an option contract because of their longer lifespan. Of course, the option premium will reflect the added extrinsic value, meaning premiums will be higher in most cases. An ...
Wednesday, 30 December 2009
7. 10.2- Trading Plan: Strategy Analysis
(Courses/Master 400 Level)
... preferred non-directional position candidates. This is important because low Beta underlying issues typically have lower premiums priced into the options, which increases the risk and commission levels ...
Tuesday, 15 December 2009
8. 10.1- Trading Plan: Mission Statement
(Courses/Master 400 Level)
... as possible to avoid volatility whiplash. The trades will target out of the money options that have a high probability of expiring worthless in an attempt to collect option premium and reduce risk.  ...
Tuesday, 15 December 2009
9. 6.0- Chapter 6: Vertical Spreads
(Courses/Undergraduate 200 Level)
... a higher premium than the written option. Credit Spread A type of spread in which an investor simultaneously writers a call or put option and buys a further OTM option with the same expiration ...
Tuesday, 24 November 2009
10. 5.9- Rho
(Courses/Undergraduate 200 Level)
... options and negative for long put options. An investor is long a First Solar December 125 call option that has a premium of $3.90 and a Rho value of .03. If interest rates INCREASED by 1%, the call ...
Tuesday, 24 November 2009
11. 5.8- Vega (Short Options)
(Courses/Undergraduate 200 Level)
... For written option positions, Vega is ALWAYS negative. This means a rise in the underlying stock’s IV will lead to increasing option premiums, which is negative for written (short) positions. Remember, ...
Tuesday, 24 November 2009
12. 5.7- Vega (Long Options)
(Courses/Undergraduate 200 Level)
... (IV). Vega is positive for long call and long put positions and negative for short call and short put positions. The reason for this is because rising IV increases option premiums. Vega is represented ...
Tuesday, 24 November 2009
13. 5.6- Theta (Short Options)
(Courses/Undergraduate 200 Level)
... ITM. An investor has written the Potash December 100 put option contract that has a premium of $1.15 and a daily Theta value of .05: One passing day will reduce the value of the contract to $1.10 (positive ...
Monday, 23 November 2009
14. 5.5- Theta (Long Options)
(Courses/Undergraduate 200 Level)
... time decay. Theta is ALWAYS negative for investors who are long option positions. An investor is long the Potash December 125 call option contract that has a premium of $7.60 and a daily Theta value ...
Monday, 23 November 2009
15. 5.3- Gamma (Long Options)
(Courses/Undergraduate 200 Level)
... Gamma relationship to Delta can be confusing at first. Just remember that both relationships work together: Call premiums increase faster as Gamma increases Delta. Put premiums increase faster as Gamma ...
Saturday, 21 November 2009
16. 5.2- Delta (Short Options)
(Courses/Undergraduate 200 Level)
...  Apple December 220 call option premium is $1.18 and the Delta for the written call option is -.14: If Apple stock moves UP $1 in value, the call option contract will increase in value to $1.32 (negative ...
Saturday, 21 November 2009
17. 5.1- Delta (Long Options)
(Courses/Undergraduate 200 Level)
... Bullish Position Google December 580 call option premium is $9.00 and the Delta is .65: If Google stock moves UP $1 in value, the call option contract will increase in value to $9.65 (positive ...
Saturday, 21 November 2009
18. 5.0- Chapter 5: Meet the Greeks
(Courses/Undergraduate 200 Level)
... of the six option pricing inputs will directly affect the premium value of the option contract. To begin, there are six new terms that need to be introduced: Delta (∆) Measures the changes ...
Saturday, 21 November 2009
19. 4.1- Option Pricing Basics
(Courses/Undergraduate 200 Level)
Up until now, we have vaguely mentioned that option premiums fluctuate with the movement in the underlying stock. However, it is much more complicated than that. In this lesson we will address the basics ...
Thursday, 19 November 2009
20. 4.0- Chapter 4: Options Pricing
(Courses/Undergraduate 200 Level)
... Before the model was released, there was no clear way to value option contract premiums. Unfortunately, the model was designed for European-style, non-dividend paying stocks. If you recall from lesson ...
Thursday, 19 November 2009
21. 3.0- Chapter 3: Options in the Marketplace
(Courses/Freshman 100 Level)
... option to another buyer the next week for a higher premium than they originally paid.  This would allow the investor to profit from the increase in the premium value of the contract (which is the ...
Monday, 16 November 2009
22. 2.3- Short Option Risk Graphs
(Courses/Freshman 100 Level)
... The writer receives a premium from the buyer in exchange for taking on the risk of writing the option.  In the following example, the investor is writing a call option. When an investor writes ...
Monday, 16 November 2009
23. 2.2- Long Option Risk Graphs
(Courses/Freshman 100 Level)
... stock price without having to spend a large amount of capital to purchase the stock. The most at risk with a call option is the premium paid. If you recall from lesson 1.1, the owner of a call option ...
Monday, 16 November 2009
24. 1.7- Exercise & Assignment
(Courses/Freshman 100 Level)
... (also called the "seller" or "writer") receives the premium that is paid by the buyer. In exchange for this premium, the seller takes on the risk of having the buyer exercise the contract. ...
Monday, 16 November 2009
25. 1.6- Option Prices (Premium)
(Courses/Freshman 100 Level)
The price of an option, also known as the premium, is made up of two factors: Intrinsic Value (moneyness) The intrinsic value of an option contract is the part of the option price that is In-the-Money ...
Monday, 16 November 2009
26. 1.2- Basic Option Terminology
(Courses/Freshman 100 Level)
... which the option contract may be exercised. Premium This is the market value of the option contract. Underlying An equity option’s underlying asset is the stock that the contract ...
Sunday, 15 November 2009
27. 1.1- Option Basics
(Courses/Freshman 100 Level)
... before expiration. Option prices (premiums) are quoted on a per share basis. For example, if an option contract costs $2.80 to purchase, the real cost of the option contract would be $280 ($2.80 x 100 ...
Sunday, 15 November 2009

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