Week of Aug 24, 2009

Not much has happened for the pass week. I had basically held on to my trades. I had AIG Sept 15 and 19 Put but it seems that even this is deep out of the money, the time premium is still there so I guess I will sit on these till expire.

As for my C Sept 4 Put, I will consider to close and free up my fund for next trade sometime next week of so.

One trade I made this week was selling C Oct 5 Put @ $0.63. Again, after I sold, Citi traded south. It would have been better if I were to waited a couple of days but, hey, who knows.

Anyway, Citigroup has trade up and I am in green now. I hope the momentum of financial stocks would continue for a while but it is still quite uncertain at this point of time.

Have a nice weekend.

Week of Aug 17, 2009

On early Aug, I sold AIG Sept 11 Put @ $1.01. It is now at $0.17. Since I need some fund to write new puts, I decided to close this, thus a 6.59% net gain in about 2 weeks. Not too shabby.

I am trying to explore on LEAPS. If the price is right, I may buy some LEAP calls. Will see if there is any attractive potentials.

Week of Aug 10, 2009

I closed AIG Aug 14 Put @ $0.1, which I wrote on Aug 5th for $0.69. Net 3.39%.

Follow with writing AIG Sept 19 Put @ $1.45. A bit risky i know but...

Week of Aug 3, 2009

I sold AIG Aug 9 Put @ $0.79 on 7/17. I just closed this today at $0.17. A rough 5% net gain in slightly more than two weeks. I followed by selling AIG Sept 11 Put @ $1.01. I am trying to take advantage of the time value on the premium. I hope AIG would stay above $11 in weeks to come.

OPTION Basics (1) (What is an Option?)

One of my plans is to use this blog to share what I know and learn on option trading, other than creating a place to welcome anyone to share their experiences and success stories and even set backs.

So...What is an Option?

An option is a contract that provides the buyer/seller with the right to buy or sell the underlying stock (100 shares) at the specified fixed price (strike price) by the specified date (expiration) in the future.

A unit of an Option is called a contract. A contract consists of 100 shares of the underlying stock.

Strike price refers to the price which the buyer/seller agree to transact on irrespective of the actual price of the stock in the future.

E.g.

Mr. A buys “1 AIG Aug 12 Call at $1.50”.

1 – number of contract (100shares/contract)

AIG – the underlying stock

Aug – Option expiring month (Option expires on the 3rd Friday of each month)

12 – is the strike price

Call – Call option

$1.50 is the premium Mr. A pays for this contract. This $ is stated as per share basis.

So $1.50 X 100 shares => Mr. A is paying $150 of premium (excluding transaction fees)

In essence, Mr. A is buying the right to purchase 100 shares of AIG at the price of $12/share between the point of transaction till the expiry date.

Mr. A pays $1.50/share (the premium) to attain this right.

Week of July27, 2009

Market had a huge run last week. I am expecting a softer trend this week. One of my targeted trade was writing a call for STP, which I own as well. Solar stock has regain strength partly due to the recent news on the Chinese government subsidizing the deployment on solar energy.

I decided to go ahead and wrote an STP Aug 22 Call at $1.00. Will see how it goes.

Week of July 20, 2009

Well another week is here and with so may corporate earnings lining up. This is going to be an interesting week.

A couple of weeks ago, I sold ABX Aug 30 PUT at $1.40. Now that ABX has risen, the same PUT has dropped to $0.15bid and $0.25ask. I managed to close this at $0.22. Not too shabby for a two weeks return. Even though % wise may not be that high but I felt ABX was stable and worth the trade.

I was tempted to roll up but the premium is not very attractive at this point of time. Will sit on this.