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I’m trying to remortgage my house guess where the funds are going to sit while I wait for a house to come up to buy! I’m gonna get another 1000 if it dips to 290 again. I sold calls on my shares for a 310 strike price may 21 exp. someone brought them so let’s see.
We've were stuck in a 20 pence trading channel for almost three months. This could be the catalyst for the next leg up and a move to a second trading channel. Options action showed a leg higher to touch 330. New trading range could be 310 to 330. GLA
Options contracts? Options are financial derivatives that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date. In the UK, one option contract for BP controls 1000 shares.
Today I can buy an option contract to buy 1000 BP shares at a price of 310 on MAY 21 for 42.50 (UK) That means that if BP trades at 310P or more on May 21 I get the option to buy those shares at 310. My hope is the shares are worth more than that. I would then "exercise" my contract, take my shares for 310 and sell them for whatever the market price is at that point in time. In Truth no one (generally) exercises their contracts and they sell the contracts before expiry.
If you hold BP shares, you can sell CALLS on them to earn extra money, so this month I sold May21 320 contracts when the price of BP was 310, that is aggressive I sold each contract for 80 GPB by the end of the week the contracts were worth half that and I brought the contracts back netting 40 GBP per contract.
I could have just waited for May21 expiry presuming that BP doesn't hit 320 I would have kept all the premium from the sale of those calls. The reason you buy them back is purely to lock in profit AND sell the contracts again. Sadly, BP didn’t move back into the 310 range this month to sell them again.
If you are a long-term holder with thousands of shares, I strongly suggest looking into this strategy to earn extra cash on top of the dividend. Search wheel options strategy.
If they brought 99 at open and the price jumped 150% then they made money already no need to wait for expiry of the contract. It’s what makes options exciting. Brought SPY last week was up 100% in a day. That was a naked 420 call. I’m gonna yolo SPY 500 Jan 2022 if the contracts fall to 100$ each.
I know it doesn’t mean much but volume on the 330 strike May21 options is up. Looks like 76 contracts sold today. Price of the contract is up 150% this morning and only cost 1.75 last night. Money made there! Perhaps the MMs will move this out of the 290 310 channel soon!
We’ve followed the pattern for two weeks now. It will either pop off these lows for break down to earlier lows. Tough to call. Am I happier missing a bottom here Eating for the pop back or waiting and buying more at lower lows. Eeek