UYG Calls

Discussion in 'Stock picks and trading strategies' started by XOM, Jan 20, 2009.

  1. XOM

    XOM Member

    Okay, SKF calls are just too damn pricey right now and more risky so I started looking at the other side of the trade for a cheap opportunity.

    I've placed an order for the UYG $6 Feb calls at .05, currently trading at .10

    Looks like UYG will need to drop down to about $2.90 to get 'em at that price, then I figure with a month to wait on a bounce this is a pretty cheap and low risk trade.

    Opinions welcomed.
  2. I have been looking at UYG today and the only thing that scares me is the fact that if things don't turn around a bit I think it could go to $1.50.
  3. XOM

    XOM Member

    Well, two things come to mind; if you truly believe that it's going to $1.50, then waiting on the Feb $3 Calls to drop to a nickel or a dime would probably be prudent. And the other thing is that your talking about a very minimal investment at an entry of could buy 100 calls for $500 and pocket $5k on a 50 cent move with a month's worth of market gyrations to get it done. It's no guarantee, but it's not exactly an expensive option opportunity.

    Of course you might need to wait on a bid/ask spread of 0 x .05 but that is exactly where the calls from Feb 8 on up are currently priced.
  4. Wookie

    Wookie Member

    Feb dead line too close in my opinion and bad news still on deck to come.

    Trying March @ $6 for 0.10ยข at this end.

    Was looking at it drop today and tempted to buy some, never occurred to me to look at the Option side....duh....
  5. XOM

    XOM Member

    Not a bad plan Wookie, of course it looks like you'll need to see about $2.25 to get those calls for a dime.

    3 and a half weeks to expiry is pretty decent on time, although 7 and a half weeks is definitely better ;)
  6. Wookie

    Wookie Member

    Nah, just canceled my order - Financials honestly nope not touching it - in my opinion forcing them to recognized their loss might be in the cards and heck possibly doing like in the UK and nationalizing the bunch of them to finish with this mess.

    Who knows - new kids in town, so at best I would buy puts but steering clear no confidence at all on this and in 2008 took a spanking of a royal nature with Citi - so forget it, changed my mind.

    Investigating Call options for June in TBT ~ $50 ish strike.

    Best of luck with this move if you go forward with it...........
  7. XOM

    XOM Member

    You're making the right decision not to take the trade if you have no confidence in it. Quite prudent.

    For me, I just don't see the financials moving down for 30 consecutive days and with volatility back I'm expecting 1000 pt swings in the dow intraday, and as I said, at a nickel a call it's not breaking the bank if I'm wrong, which is always a possibility.
  8. 3percenter

    3percenter New Member

    Why not do a spread? Say, buy a Jan10 4 call and sell a Jan10 9 call? Cuts your c/b about in half to $110 and caps your profit to $890.
  9. XOM

    XOM Member

    Well, for one I'd need to own the underlying to sell a call as my broker does not allow selling naked calls and I'm not too hot on that strategy even if they did allow it.

    I don't know what the volume was like on the JAN10 calls yesterday so I don't know how feasible they might be in that spread, but I will take a look at them today to see if they might fit my current strategy while affording a longer time frame.;)
  10. XOM

    XOM Member

    131 calls have gone through at .05...I must be at the end of a very big line as my order is still unfilled and I placed my order on the 20th!
  11. XOM

    XOM Member

    Okay, I put my order back in for the FEB6, except I had a brain fade and purchased at my planned intraday sell price of .10

    Do not text, im and trade at the same time, lol.
  12. TradingKev

    TradingKev New Member

    I just picked up some Feb5 calls at .10 as well.
  13. XOM

    XOM Member

    Well that wouldn't bother me if I had accidentally bought the FEB5, but I paid double what I wanted to for the FEB6.
  14. XOM

    XOM Member

    Well now, if this after hours action holds up after market open tomorrow, I may just be a lucky idiot on this blunder, lol.

    UYG up 8% in AH trading.
  15. Wookie

    Wookie Member

    Best of luck and don't fell bad and alone in the Idiot camp - you are not - trust me !

    (I'm not touching Financials - I shiver when I think of them, want Cuomo to throw the entire pack of rats in jail - and sincerely trust that Nationalizing the entire crap is the most logical way to get pass this mess and focus on something else - like save jobs and put people to work - hence stop the catastrophic USA destruction in the making...! )
  16. XOM

    XOM Member

    I don't mind the financials at all, in fact they are my favorite sector at the moment; volatility is good. I just don't care too much for the way I bought these particular calls, lol.
  17. XOM

    XOM Member

    Interesting action in these FEB6 calls to say the least; UYG up as much as 30% from Monday's close at times and these calls stay at the same .05x.10 bid/ask? The other strikes are having some appropriate movement.

    I have noticed large lots going through at .10 (2000 recently) and then small 1 call lots going through at .05...while UYG is setting a new high. Seems like some may be trying to keep the bid down so that hey can either buy or sell at .10 There have not been that many sales at .05 though, so it does not look like profit taking.

    Anyway, thought I'd point out some unusual (to me) activity. I think we may see $5 on UYG if it can get through $4 and then $4.30ish.
  18. XOM

    XOM Member

    Just an update on this trade;

    Still 2 and half weeks till expiry so with the impending "bad bank" news announcement there is still a chance that this trade generates a profit. However it's all going to boil down to timing, as it always does with options.

    Normally I might have cut my losses already on this one, but the commissions are so high that it's just not worth selling at less than the purchase price.

    I did however buy some MAR SPY83 calls to give myself more time to capitalize on anything perceived as good from the government to the market, that position is up 12% so far today. So I could exit both trades and come out about even but I think I'm going to let the UYG calls ride and also let the SPY calls run a little and see what they may ultimately bring, a run to 900 on the S&P500 would make those calls very profitable.


    Were it not for my order entry blunder, this trade as planned (buy @ .05 and sell @ .10) would have been closed already for a 50% profit.
  19. XOM

    XOM Member

    Well I decided that it might be a tad bit silly to stare down a 12% gain two days in a row, so I sold the MAR SPY83 calls at 5.65 (bought at 4.95)

    I should have sold at the same price yesterday then bought back on the pullback and sold again today, but I was being a little greedy and I'm not convinced that 850 can broken through on the S&P500 in the near term; the more failed attempts there are, the more downward pressure is applied, imo.

    Still holding the UYG calls
  20. XOM

    XOM Member

    These calls expired worthless on Friday.

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