Attached is a PDF of prices for Jan 2016 LEAPS as they were on 2/27/14 with a stock price of $253.39. $200 Calls are now less than half of what they were then. $300 Calls are now less than a quarter of the price then. But 2/27/14 was near a local peak when prices were rapidly increasing.
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Newbie Options Trading
- Thread starter Jonathan Hewitt
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- investing options TSLA tsla stock
Attached is a PDF of prices for Jan 2016 LEAPS as they were on 2/27/14 with a stock price of $253.39. $200 Calls are now less than half of what they were then. $300 Calls are now less than a quarter of the price then. But 2/27/14 was near a local peak when prices were rapidly increasing.
Muskol
Member
I think that was the day it hit $265 ATH intraday, monster Adam Jonas upgrade was on 2/25 after market close.
Edit:
Checked, 2/26 was the local ATH, report 2/25 before the open...cruel comparison to today.
Date/Open/High/Low/Close/Vol
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Muskol
Member
Right there with you. My first 'weeklies' in a long time: Bought 'lotto' tickets: Jan 23 240s yesterday (so of course they are down today!)
Raffy.Roma
Rome (Italy)
I am not an expert but I suppose that a "call" is like a bet. In this case you are betting that on Jan 23 the stock will reach 240s. Hope that you are right. :smile: (If I understood correctly).
Actually, most people do not buy weeklies that are this much 'out of the money' to see them surge to the strike price and beyond by the expiration date. What I hope for is that I bought them for 50 cents a contract and that during the NAIAS TSLA price goes up to say $225 very quickly one day due to major positive news and I can sell them to someone else for $1/contract. The term 'lottery ticket' comes into play if suddenly these way out of the money contracts see a surge towards $240 quickly and all of a sudden someone is willing to pay say $3-4/contract. With this strategy I am just as likely to sell them for 10 cents a contract if TSLA muddles around 200-210 next week or so.
This is exactly what happened last year at the NAIAS. Many people made a lot of money when Jerome announced that TM had beaten delivery/income guidance by 20%.......
Gerasimental
Member
New to options too.
Just looking at the TSLA options chain for Jan23. Why would the ask price for 245 calls be than that for 237.5, 240, or 242.5?
I can see that the volume in 245s is much higher so high demand will drive the price up, but why would anybody keep buying 245s once their price has exceeded that of 240s? Surely for the same amount you'll buy a 240 which is more likely to end up in the money and will also sell for more if there good news at NAIAS?
OK, got in today when share price was around $188. February, March, June, January '16. Didn't like the January '17. We'll see.
The last several days' price action have been kind to short and intermediate term calls. Will it continue? Hopefully some good news out of Tesla in the next week or two will continue to propel things. This was the week for auto reporters to clean up any last news from NAIAS, they'll be looking for something next week. Mysterious Model X profile image tweeted to announce February reveal? I'd be happy with that.
The Blue Owl
Endangerous Herbivore
The Blue Owl
Endangerous Herbivore
Please note that the results you see assume a constant volatility factor for the whole duration you're looking at. You can get a very good idea of the influence of time alone on the option price, but you have to keep in mind that in reality volatility will change over the same period. Volatility itself is volatile, as it were. Some of the most dramatic changes in volatility appear around earnings.
So make sure you also play with the volatility factor (the calculator allows it); its influence on the option price can be very significant. You can find historical volatility tables with a Google search.
Thanks, I will examine those. I actually did notice that right away just looking at some of the tables. For example, returns around the 600 level, which was the auto-populated maximum when I began to run scenarios, were very similar throughout time--Jan '15 to Jan '17. But there is no way that if the stock jumped to 600 in a month's time that the option would be the same value as it would be in 2 years. I'm assuming that would be a function of the insane increase to volatility in such a dramatically quick price change. Either way, this helps get a feel for how things could look at certain levels.
Do people generally find they are able to get options for closer to the bid, mid, or ask?
The Blue Owl
Endangerous Herbivore
I don't understand what you mean. Obviously, there is a difference in the option price between one month from now and 2 years from now, but that's due to the time factor. You probably mean something else, could you clarify?
That depends on how liquid the option is and on how fast the stock price is moving and in what direction. It can be all over the map. Short-term options in a heavily traded/speculated stock like TSLA tend to be very liquid. But many expiry/strike combinations can be much less so, which is when you'll see bigger spreads. You may have to be more flexible if you really want it, or you could choose to be patient (but then the transaction may never happen).
My apologies, I'm probably not explaining it well. Here is the table I was referring to, from a $250 strike Jan '17 at a $28.50 price.
What I am saying is that I would expect if the stock rose to 615 very quickly, this would increase the IV dramatically. There does seem to be some time decay here, going from 1197% to 1177% on the 615 line, but my statement is based on the assumption that the 1197% would increase quite a bit based on the hypothetical increase in IV, while the 1177% would change less because that is the intrinsic value. I guess I am kind of assuming the IV becomes less of a factor in the equation as time to expiry comes closer. Maybe that is not correct.
Running a test of increasing the volatility does in fact increase the 1197% while leaving the 1177% constant, so it appears that my logic is correct, but perhaps I am attributing the factors incorrectly.
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