Sunday, April 18, 2010

Option activities for April 2010


Options involve risk and are not suitable for all investors.  Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (the "ODD").  Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606.  Any strategies discussed, including examples using actual securities and price data, are strictly for illustrative and educational purposes.  In order to simplify the computations, commissions, fees, and margin interest and taxes have not bee in included in the examples used in this presentation.  These costs will impact the outcome of all stock and options transactions and must be considered prior to entering into any transactions.  Investors should consult their tax advisor about any potential tax consequences.  No statement within this presentation should be construed as a recommendation to buy or sell a security or to provide investment advice.

In general, a very forgettable month by any standard.  I don't blame myself if unforeseen events unfold but only for giving profits back due to my own foolish acts.

Summary of option activities for March 2010:

-- No trades for the first two weeks due to low volatility.  The VIX went as low as 15.23.  Basically low volatility affects the premium you pay or sell when you deal with options.  In the $OEX context, it means the call and put strikes do not "open up" as well and it may difficult to get "even-money" for $10 or $15 spread with 4 weeks to go.
-- Traded the last two weeks.
-- Traded 20 contracts of 520-515-490 1:3:2 BWB
-- Traded 10 contracts of 525-520-490 1:3:2 BWB
-- Traded 20 contracts of 535-530-490/485 1:3:2 BWB
-- Offset the short call on C due to massive move upwards
-- Re-collar GS for a $5 move upwards
-- Bought back the GS 185 short call and sold the GS 175 call due to the SEC litigation
-- Total profit is $2,541 on options-related transactions (that excludes stocks and bonds)

-- dream

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