Hi Yam. I ready your blog in sometimes and notes. You play stock options very well. I am leaning the way to play stock options now. So would you mind tell me, which broker are using now for stock options. What do you think about to do the short saddle or short strangle on 941 or 939 for ranging trading.....
Options is complex and risky if you don't know how to control the risk. Doing short saddle/ strangle need to depend on you 1. market view 2.purpose 3. time frame 4.risk control and then choose options strike price / time / contract no. etc.....
Thanks to your reply. Have opened an account in 輝立 as well. Would you mind let me know where/which book/which website you learn before and it is good to a beginner ? Another question need your help about the short call/short put. As I received the option premium from short call/put. Right ? For examples, two weeks ago, I short call HKB 60.0/May 09 and gained the option premium at $1.4. Now I found option premium of this options rise to $2.9. But 005 is at $57.95 today. If I settle this contract today. Does it mean I lost $1.5 ($2.9-$1.4) ? What if I hold the contract till to end of May and fortunately 005 does not exceed the exercise price (HKB 60.0 MAY 09). But the option premium is still kept at $2.9. Will I need to lost money. I am sorry for my long question. As I found the text book or example from the website all support the contract will be exercised and the option premium is no change. In fact I found the option premium is keeping changing.
1) Go to search foreign books/ website. No HK books are good. I think this blogger in Hk suit you: http://hk.myblog.yahoo.com/financial-freedom/index?l=f&id=31 2) yes you lost 2.9-1.4, if u settle the contract today (let say 7/5/2009) 3) If #5 on the last day May let say $59.9...then yr HKB 60.0 MAY will become $0 no value 4) if it is $60.5...you need to sell 1 hand #5 out (give to the options buyer) so, if you bought yr #5 at $33...no $ lost. if you don't have #5, the broker will buy #at 60.5 on the market ...and u sell to buyer at $60..so or...u cover your short call ..by buying HKB 60 MAY at $2.9
Options keep changing the price , mainly because 1) Volatility 波幅 2) Delta those are the most important concept in options 輝立 got broker....you can phone yr broker and chat with him / her....if your broker good at options...they should know the relationship
Hi Yam: Further to your reply on 9:29am today. 3> If #5 on the last day, its price is below $60 (let's said 59.7). As you said , the stock price is below the exercise price (HKB 60.0 MAY 09).That mean the opposite will not exercise the contract ? So I could earn the option premium at all ?
the opposite most of the time won't exercise .......BUT in rare situation..the opposite still exercise...eg. get the stock and then get dividend
better think like this...the premium you get is your $ and cash in your bank immediately.....so if #5 finally below 60 finally, the options value = $0 you earn 1.4 - 0 = 1.4 if above 60 and the options value = 2.9 1) you cover yr short call before market close...buy the options at 2.9 ..so u loss 2.9 - 1.4 2) u let the opposite exercise...u still got 1.4 premium ..But u need to give a stock to opp at price 60 [u can give yr stock if u got one, or buy it in market by market price ...eg.60.5]
Good afternoon : Yam Ching Your explanation is crisp. How about your short call on 941 ? I am think to do my first order on 941 (Short Call 80) Then received 0.72 option premium. As I do not think the HSI will go further, and 941 seems weaker than #05 or other big stock. What is your advice to me ? Thank you in advance for your teaching...
really depend.....if you got 941 stock..you may do cover call... options got many strategy, hard to say which one is the best.... I do stock options just because I want to accumulate my favorite stocks. You see I only do short call on stocks I am holding in my long-term portfolio.
話! 今次好準呀!
ReplyDelete不是太準...可能早左開941 short call ，
ReplyDelete不過點都好．．難得你話準，真係好少有 hahaha
Hi Yam.
ReplyDeleteI ready your blog in sometimes and notes. You play stock options very well. I am leaning the way to play stock options now. So would you mind tell me, which broker are using now for stock options. What do you think about to do the short saddle or short strangle on 941 or 939 for ranging trading.....
I use Phillip 輝立 to trade ......
ReplyDeleteOptions is complex and risky if you don't know how to control the risk. Doing short saddle/ strangle need to depend on you 1. market view 2.purpose 3. time frame 4.risk control and then choose options strike price / time / contract no. etc.....
Thanks to your reply. Have opened an account in 輝立 as well. Would you mind let me know where/which book/which website you learn before and it is good to a beginner ?
ReplyDeleteAnother question need your help about the short call/short put. As I received the option premium from short call/put. Right ? For examples, two weeks ago, I short call HKB 60.0/May 09 and gained the option premium at $1.4. Now I found option premium of this options rise to $2.9. But 005 is at $57.95 today. If I settle this contract today. Does it mean I lost $1.5 ($2.9-$1.4) ? What if I hold the contract till to end of May and fortunately 005 does not exceed the exercise price (HKB 60.0 MAY 09). But the option premium is still kept at $2.9. Will I need to lost money. I am sorry for my long question. As I found the text book or example from the website all support the contract will be exercised and the option premium is no change. In fact I found the option premium is keeping changing.
1) Go to search foreign books/ website. No HK books are good. I think this blogger in Hk suit you: http://hk.myblog.yahoo.com/financial-freedom/index?l=f&id=31
ReplyDelete2) yes you lost 2.9-1.4, if u settle the contract today (let say 7/5/2009)
3) If #5 on the last day May let say $59.9...then yr HKB 60.0 MAY will become $0 no value
4) if it is $60.5...you need to sell 1 hand #5 out (give to the options buyer)
so, if you bought yr #5 at $33...no $ lost. if you don't have #5, the broker will buy #at 60.5 on the market ...and u sell to buyer at $60..so
or...u cover your short call ..by buying HKB 60 MAY at $2.9
Options keep changing the price , mainly because
ReplyDelete1) Volatility 波幅
2) Delta
those are the most important concept in options
輝立 got broker....you can phone yr broker and chat with him / her....if your broker good at options...they should know the relationship
This comment has been removed by the author.
ReplyDeleteHi Yam:
ReplyDeleteFurther to your reply on 9:29am today.
3> If #5 on the last day, its price is below $60 (let's said 59.7). As you said , the stock price is below the exercise price (HKB 60.0 MAY 09).That mean the opposite will not exercise the contract ? So I could earn the option premium at all ?
the opposite most of the time won't exercise .......BUT in rare situation..the opposite still exercise...eg. get the stock and then get dividend
ReplyDeletebetter think like this...the premium you get is your $ and cash in your bank immediately.....so if #5 finally below 60 finally, the options value = $0
you earn 1.4 - 0 = 1.4
if above 60 and the options value = 2.9
1) you cover yr short call before market close...buy the options at 2.9 ..so u loss 2.9 - 1.4
2) u let the opposite exercise...u still got 1.4 premium ..But u need to give a stock to opp at price 60 [u can give yr stock if u got one, or buy it in market by market price ...eg.60.5]
Good afternoon : Yam Ching
ReplyDeleteYour explanation is crisp. How about your short call on 941 ? I am think to do my first order on 941 (Short Call 80) Then received 0.72 option premium. As I do not think the HSI will go further, and 941 seems weaker than #05 or other big stock. What is your advice to me ? Thank you in advance for your teaching...
really depend.....if you got 941 stock..you may do cover call...
ReplyDeleteoptions got many strategy, hard to say which one is the best....
I do stock options just because I want to accumulate my favorite stocks. You see I only do short call on stocks I am holding in my long-term portfolio.