Stock Options Trading - AMD, NVDA, GM, NOK
Got bored yesterday and decided to do the basic stock options trading strategy (it doesn’t get any safer/easier than this)
Decided to not quote dollars on my diary so everything will be normalised to one contract… the most important thing is % return not $ return. If you don’t understand this concept you better think twice about investing.
The Trade - 25/9/2007
AMD
Options/Contract = 100
Buy 100 AMD @ $13.50
Sell 1 AMD $13.00 Call @ $0.91
Time Value: $0.41
Intrinsic Value: $0.50
Breakeven Point: $12.59
Assigned Return: 3.15% ($0.41/$13.00)
Unassigned Return: 7% ($0.91/$13.00)
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NVDA
Options/Contract = 100
Buy 100 NVDA @ $35.85
Sell 1 NVDA $35.00 Call @ $2.24
Time Value: $1.39
Intrinsic Value: $0.85
Breakeven Point: $33.61
Assigned Return: 3.97% ($1.39/$35.00)
Unassigned Return: 6.4% ($2.24/$35.00)
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GM
Options/Contract = 100
Buy 100 GM @ $35.06
Sell 1 GM $32.50 Call @ $3.87
Time Value: $1.31
Intrinsic Value: $2.56
Breakeven Point: $31.19
Assigned Return: 4.03% ($1.31/$32.50)
Unassigned Return: 11.91% ($3.87/$32.50)
====================================
NOK
Options/Contract = 100
Buy 100 NOK @ $36.74
Sell 1 NOK $35.00 Call @ $2.66
Time Value: $0.92
Intrinsic Value: $1.74
Breakeven Point: $34.08
Assigned Return: 2.63% ($0.92/$35.00)
Unassigned Return: 7.6% ($2.66/$35.00)
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Some of you must be thinking why why why? and here is my reason.
AMD has been hammered over the past year very badly and it has created a rebound and plenty of support levels. I don’t think AMD will fall anymore…
NVDA this is one of the best performing stock on the NASDAQ, didn’t even feel credit crunch!
GM… yes there are strikes, I’m buffered for such a big drop and I have so much confidence they will sort out the strike and return to normal business (if they don’t… I doubt it will fall that much in the next 30 days)
NOK everybody loves mobile phones… I figured I might as well get some of these shares and rent them out
Been a bit lazy this month to look for trades property. Will be going to EBS tomorrow afternoon so wanted to pay for the trip before I leave… (We will find out in 30days…)
Thats all the Stock Options Trading from me for tonight! have a great month!
