If it's real, and it's doubtful since it's /web, they invested roughly 40k buying call options (betting the stock price went up). The price went up. They made like 90k profit on the trade.
Thats how much the call option cost per share when they bought. So one call option would be 100 x 1.98 (100 shares per contract). They bought the 4/29 contracts which is why the gain is so big. The closer to expiration date, the more the call price moves. The downside is if the stock doesn't go up the contracts expire worthless and they lose everything.
Just remember that banks benefit from a steeper yield curve more than they do just "higher Rates" . They will struggle in this higher rate environment if we don't get some steepening back into the curve.
What exactly is the spread representing between the call option $1.98 avg and Current price $6.20? I don't quite get the relationship between that and the stock's actual price of over $600. I mean the stock price only moved like $30 or something like that, I dont' get where that $6.20 comes from.
Lightning Lord Rule
Some answers given already detail below:
Don't know if my previous posts answers this but I'll address directly. The odds improved, that is where the price change from $1.98 to $6.20 came from. As I mentioned there is still no intrinsic value to the option it just became more likely to be a winner. This trade is not impressive from a option % gain perspective it's rather "meh". Much bigger moves occur if a option goes from being well out of the money to well into the money. For example if COST went above $630. So just think of it as a curve, the current price at the end of the day was closer to the strike than it was in the morning and that change in price (premium) is a result of the increased likelyhood of the stock price getting to the strike by expiration.
It helping I think but I'm still missing the big picture. When he sold at $6.20 where did that $80k profit come from, who exactly lost $80k?
I just logged off pc for the night so I can’t fully answer this. But first off he didn’t sell. They moneybwould come from the person who would then hold the contracts but the real answer is more complicated as the seller to him originally was the market maker and buyer if he sold would also likely be the market maker and it would probably be 10 paragraphs to fully explain this . But ignore all that for simplicity sake view contracts simply as shares and it’s no different than shares trading hands
Start here. It will help.
That did help a lot.Start here. It will help.
Everything Options
Options can be a powerful tool to add to your investing/trading toolkit. They can dramatically increase your risk or they can mitigate it and everything in between. This thread is for discussing options plays, options education and questions. I have been trading options for about 20 yrs now...www.firesofheaven.org
Not really. Options are math. Thus the Greeks. Options are also leverage without borrowing (though of course you can borrow) asa contract represents 10 shares of the underlying. One thing to remember is most folks trading options aren't trading them looking to take possession of the underlying shares. They are trading to profit from the stock price moves and then ridding themselves of the contracts pre-expiry.
Cant stress this enough. Until you are really comfortable with all the ins and outs of equity trading, options plays are basically asking someone to take your money. Also, if you dont like math, options probably aren't for you.You are so much better off fully understanding how equity trading (stock trading) works before you foray into options. There are a hell of a lot of moving parts to options, so it really isn't that easy to just quick explain their price movements.
Here's another source of info, and a great one at that for all things investing:
What Is Options Trading? A Beginner's Overview
All the essential information an investor needs to understand how the options market works and how to start trading options.www.investopedia.com
Lightning Lord Rule
I had a few minutes so here is a screen cap of one of my basic screens. As I said i add tons of filters to it as more of an omnibus screener.
