RE: [TheOptionClub.com] what am I missing when trading options?

 

Look at them individually:

 

With the stock at $64 ;

 

Short 40 put expires worthless

Long 30 put expires worthless

Short 50 call now worth -14

Long 60 call now worth +4

 

You lose 10 points on these 4 contracts add back in the 1 point credit you received when you first put the trade on and you have a net loss of $900 on the transaction as a whole.

 

Hope this helps.

 

Ken

 

 

From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On Behalf Of paul7313
Sent: Thursday, June 10, 2010 10:24 AM
To: OptionClub@yahoogroups.com
Subject: [TheOptionClub.com] what am I missing when trading options?

 

 

I sell an IC; 1 contract; sell 50 and buy 60 call, and sell 40 and buy 30 put. both give me a credit of 1. when the options expire, the stock is 64

the call is worth -100, the put is worth 100. total 0

or the IC is worth 200 minus the 100 call= 100 total

I want to get this right before I risk real money

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