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UPS Discussions
401K Self managed portion UPS stock
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<blockquote data-quote="Jackburton" data-source="post: 4379105" data-attributes="member: 34538"><p>Options, he’s betting the stock will be up above $110 by expiration date, Oct 16. He’s paying a premium of about $2 per contract, each has 100 shares. So basically betting $4000 that it’s above $112/share by that time. It allows you to leverage your money but you pay a premium (Theta) to do that. </p><p></p><p>If it’s below $112 by options expiration, the 4k goes poof as exercising the option would be paying extra between actual stock price and the contract price, for a stock that’s worth less, so you let the option expire worthless. If it’s above the $112 break even point, he would make what ever the difference is X2000. So if it was $114, he’d make $4000, and so on.</p></blockquote><p></p>
[QUOTE="Jackburton, post: 4379105, member: 34538"] Options, he’s betting the stock will be up above $110 by expiration date, Oct 16. He’s paying a premium of about $2 per contract, each has 100 shares. So basically betting $4000 that it’s above $112/share by that time. It allows you to leverage your money but you pay a premium (Theta) to do that. If it’s below $112 by options expiration, the 4k goes poof as exercising the option would be paying extra between actual stock price and the contract price, for a stock that’s worth less, so you let the option expire worthless. If it’s above the $112 break even point, he would make what ever the difference is X2000. So if it was $114, he’d make $4000, and so on. [/QUOTE]
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