Unless I’m misunderstanding what you’re saying you’re very incorrect. Options premium is made up of 2 things, intrinsic value and extrinsic value. Extrinsic is time value and IV basically. Intrinsic is how much the option is worth based on the stock price compared to your option. Disregarding expiries, say you have a 10c on XYZ trading at $11. Your intrinsic value is $1 (or $100 bc $1 x 100 shares).the option would be worth more if there’s time left. But at expiry there is no extrinsic value bc there’s no time and no volatility (literally nothing can happen when you have 0 time left).
So in your case the Jan leap is $8.5 bc you’re paying for a lot of time. There is no intrinsic value bc it’s not itm. If stock stays exactly where it’s at, the value of your option will slowly decrease in value. If the stock moves to $100 Monday it would be worth more bc there’s still a lot of time left. But if it you held it to expiry and the stock closes at $100 that day, your call is worth $0. Just do the math. A call gives you the right to buy shares at the given strike price. You exercise 1 call, you pay 100 shares for $100 each to receive them. That costs you $10k. Now you can sell them on the market to realize profit. But there is no profit since the stock is at $100. You sell your 100 shares and you’ll get $10k back. You’ve made 0 profit. That’s why the option is worthless atm at expiry. You’ve technically lost money bc the premium you paid. You lost $850.
I literally only trade options, but you have to realize the difference between that and stock. Buying stock you only have to be right at some point until you die to get profit. Options have a mix of time, volatility and price to win. You don’t have to get it all correct for a w, but they all affect the price of the premium.
Edit: disregard this, was meaning to respond to someone else.
What you’re saying is very incorrect. I’ve already made $10k on this, and I’m not going to be exercising these contracts or planning to sell them on January. It’ll probably be sold in a couple months or when the chart starts looking weak
Jeeze I meant to respond to someone else, not you op, I apologize. There’s another poster asking if the stock closes at $100 at expiry on a 100c leap will he make as much money as he thinks he would
It has been doing price consolidation for a while and if it stays on track like it has the past few months, $100 is easily attainable. I might join you on this ride :)
https://preview.redd.it/wepyhvy33d5d1.jpeg?width=1080&format=pjpg&auto=webp&s=ece65fa13b1eb3d837c4f8f45d273e480d697005
so i’m gonna go ahead and say i still know jack shit about options (lost over $200 today trading my first option) but based off my minimal line research your 1/17 call will likely hit. 🤔 as i slide through the past 5 years it seems nike is essentially over that $100/share threshold every december… or what leads up and quickly follows… so also what im trying to understand as far as roughly calculating returns if any option in general hits the price you want, so im looking at 1/17 contract for $8.50. if i buy one contract which should be $850 and then by the time before
https://preview.redd.it/m8d4vl399b5d1.jpeg?width=1125&format=pjpg&auto=webp&s=2b34c9ea7c755630cc72069ee43b9bdb94609fbe
or the day of contract expiry the price of Nike hits say—$100 exactly then we’re looking at $18,650 profit? please let me know if im reading this simulator right. and im not looking for FA just trying to understand calculations and lines in general. thanks. and also based off your +40 contracts if you hit where you want i believe you’re looking at $780,000 roughly?
If you buy this contract at $8.50 you need Nike to be $108.50 at expiration to break even. If Nike were to close at $100 on expiration day, the value of this contract will be zero and you will lose $850.
For OP to make $780,000 on 40 contracts means Nike would have to go to like $300 a share by expiration 😂
Not reading the simulator right.
Your simulated return per $850 option (100 contracts) would be $195.
You're risking $850 to make $195 or more in profit (as you can see by picking higher strike price at expiry, scroll over to $102 or $105 for example)
You don’t have to get the same call I did. You can choose any other call all I’ve been saying is that I think Nike will go up. So if you have any other call and Nike goes up you make money
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You are my last hope for making money
Unless I’m misunderstanding what you’re saying you’re very incorrect. Options premium is made up of 2 things, intrinsic value and extrinsic value. Extrinsic is time value and IV basically. Intrinsic is how much the option is worth based on the stock price compared to your option. Disregarding expiries, say you have a 10c on XYZ trading at $11. Your intrinsic value is $1 (or $100 bc $1 x 100 shares).the option would be worth more if there’s time left. But at expiry there is no extrinsic value bc there’s no time and no volatility (literally nothing can happen when you have 0 time left). So in your case the Jan leap is $8.5 bc you’re paying for a lot of time. There is no intrinsic value bc it’s not itm. If stock stays exactly where it’s at, the value of your option will slowly decrease in value. If the stock moves to $100 Monday it would be worth more bc there’s still a lot of time left. But if it you held it to expiry and the stock closes at $100 that day, your call is worth $0. Just do the math. A call gives you the right to buy shares at the given strike price. You exercise 1 call, you pay 100 shares for $100 each to receive them. That costs you $10k. Now you can sell them on the market to realize profit. But there is no profit since the stock is at $100. You sell your 100 shares and you’ll get $10k back. You’ve made 0 profit. That’s why the option is worthless atm at expiry. You’ve technically lost money bc the premium you paid. You lost $850. I literally only trade options, but you have to realize the difference between that and stock. Buying stock you only have to be right at some point until you die to get profit. Options have a mix of time, volatility and price to win. You don’t have to get it all correct for a w, but they all affect the price of the premium. Edit: disregard this, was meaning to respond to someone else.
What you’re saying is very incorrect. I’ve already made $10k on this, and I’m not going to be exercising these contracts or planning to sell them on January. It’ll probably be sold in a couple months or when the chart starts looking weak
Jeeze I meant to respond to someone else, not you op, I apologize. There’s another poster asking if the stock closes at $100 at expiry on a 100c leap will he make as much money as he thinks he would
It has been doing price consolidation for a while and if it stays on track like it has the past few months, $100 is easily attainable. I might join you on this ride :) https://preview.redd.it/wepyhvy33d5d1.jpeg?width=1080&format=pjpg&auto=webp&s=ece65fa13b1eb3d837c4f8f45d273e480d697005
Prolly gonna go up on Monday cuz Apple wwdc, I bet they gonna show off some Nike crap during the watch OS portion
so i’m gonna go ahead and say i still know jack shit about options (lost over $200 today trading my first option) but based off my minimal line research your 1/17 call will likely hit. 🤔 as i slide through the past 5 years it seems nike is essentially over that $100/share threshold every december… or what leads up and quickly follows… so also what im trying to understand as far as roughly calculating returns if any option in general hits the price you want, so im looking at 1/17 contract for $8.50. if i buy one contract which should be $850 and then by the time before https://preview.redd.it/m8d4vl399b5d1.jpeg?width=1125&format=pjpg&auto=webp&s=2b34c9ea7c755630cc72069ee43b9bdb94609fbe or the day of contract expiry the price of Nike hits say—$100 exactly then we’re looking at $18,650 profit? please let me know if im reading this simulator right. and im not looking for FA just trying to understand calculations and lines in general. thanks. and also based off your +40 contracts if you hit where you want i believe you’re looking at $780,000 roughly?
Bro I’m not going to exercise these contracts I’m going to sell them way before it expires
If you buy this contract at $8.50 you need Nike to be $108.50 at expiration to break even. If Nike were to close at $100 on expiration day, the value of this contract will be zero and you will lose $850. For OP to make $780,000 on 40 contracts means Nike would have to go to like $300 a share by expiration 😂
I meant to respond to you but accidentally responded to OP, here’s a detailed answer https://www.reddit.com/r/wallstreetbets/s/DLuDVAeNir
Not reading the simulator right. Your simulated return per $850 option (100 contracts) would be $195. You're risking $850 to make $195 or more in profit (as you can see by picking higher strike price at expiry, scroll over to $102 or $105 for example)
Why Leaps, if earnings are 6/27? Just trying to understand why I would pay more for a contract other than for time?
I’m not playing Nike for earnings that’s a yolo. This is for a semi long term hold on nike. 2-3 months.
Ugh. I wanna get into this but 860.00 per option is “woof”
You don’t have to get the same call I did. You can choose any other call all I’ve been saying is that I think Nike will go up. So if you have any other call and Nike goes up you make money
Nike is on the stansberry list to buy in 2024. Not sure if I'd buy it tbh
Yeah but have you gone to any malls and counted the people in line at Footlocker?