Money and Finance
I'm a little behind on this mainly because I was busy with work and getting to come home. Then I forgot until today that I hadn't made a post about this. On 3/27/12 I purchased 2 contracts of the BAC Jan 18 2014 Call Option for $2.11, so after commission it cost me $431.50. The call options give me the right to purchase 100 shares each of BAC at a price of $10 per share at anytime between now and Jan 18 2014 as long as BAC is trading above $10. My breakeven is really at $12.16 since you need to add the cost of the option to the strike price.
This is essentially my long term bullish bet on BAC making a comeback. I really like what they are doing with the landlord/rental opportunity for the homes that are in foreclosure. If they handle that right then they can turn the liability of the homes in foreclosure with the added issue of selling to get them off their books in a severely depressed market into a better situation for the bank and the people involved. They can then sell the houses off with the stated rental agreements in place to get a premium over the value of the house based on the fact that the tenants would already be in place.
Based on what I've seen, BAC has been making great strides and if this foreclosure rental works out nicely you can see some earnings surprises that will push the stock even higher. I wouldn't be surprised to see BAC be trading over my breakeven price by year-end which would give me another year to seek out more profit. Plus the expiration date is so far out that I have plenty of time for there to be hiccups along the way and still make some good profit. Ultimately I will probably exercise the options if everything works out as I think, while this won't give me the largest percentage gain it will net me a larger dollar gain.
I've been messing and looking more at options right now mainly because I just don't have the available capital to make purchases that would keep commission costs from eating too much of the return. I'll keep you posted on my option plays as well as my portfolio and dividends. It's going to be a great day when I can start plowing my debt service payments back towards my brokerage account to start contributing to my FI.
- Lots Of Options
No this post isn't about all the great investment opportunities that Mr. Market is giving us, it's about all of my recent option trading/selling activity. There's been a lot more activity on this front than I expected to be reporting. My...
- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- Selling Puts For Added Income
This morning Archer-Daniels Midland was trading at $26.97. Since I would like to get more into the stock with it trading around a 14% discount to my calculated fair value, I figured I would check out the potential option moves to make. The fair value...
- Recent Buy
This morning I performed a buy-write of 200 shares/2 call options for Bank of America (BAC) expiring on October 20, 2012. The reason I went the buy-write route is that you can save on commission by executing them together rather than separate. Let's...
- Put Options Explained
A lot of people hear the word options with respect to stocks and think it's a high risk venture. While options are for everyone I feel they definitely have a place in a portfolio. I prefer selling put options to call options which I will explain why...
Money and Finance
Recent Transactions
I'm a little behind on this mainly because I was busy with work and getting to come home. Then I forgot until today that I hadn't made a post about this. On 3/27/12 I purchased 2 contracts of the BAC Jan 18 2014 Call Option for $2.11, so after commission it cost me $431.50. The call options give me the right to purchase 100 shares each of BAC at a price of $10 per share at anytime between now and Jan 18 2014 as long as BAC is trading above $10. My breakeven is really at $12.16 since you need to add the cost of the option to the strike price.
This is essentially my long term bullish bet on BAC making a comeback. I really like what they are doing with the landlord/rental opportunity for the homes that are in foreclosure. If they handle that right then they can turn the liability of the homes in foreclosure with the added issue of selling to get them off their books in a severely depressed market into a better situation for the bank and the people involved. They can then sell the houses off with the stated rental agreements in place to get a premium over the value of the house based on the fact that the tenants would already be in place.
Based on what I've seen, BAC has been making great strides and if this foreclosure rental works out nicely you can see some earnings surprises that will push the stock even higher. I wouldn't be surprised to see BAC be trading over my breakeven price by year-end which would give me another year to seek out more profit. Plus the expiration date is so far out that I have plenty of time for there to be hiccups along the way and still make some good profit. Ultimately I will probably exercise the options if everything works out as I think, while this won't give me the largest percentage gain it will net me a larger dollar gain.
I've been messing and looking more at options right now mainly because I just don't have the available capital to make purchases that would keep commission costs from eating too much of the return. I'll keep you posted on my option plays as well as my portfolio and dividends. It's going to be a great day when I can start plowing my debt service payments back towards my brokerage account to start contributing to my FI.
- Lots Of Options
No this post isn't about all the great investment opportunities that Mr. Market is giving us, it's about all of my recent option trading/selling activity. There's been a lot more activity on this front than I expected to be reporting. My...
- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- Selling Puts For Added Income
This morning Archer-Daniels Midland was trading at $26.97. Since I would like to get more into the stock with it trading around a 14% discount to my calculated fair value, I figured I would check out the potential option moves to make. The fair value...
- Recent Buy
This morning I performed a buy-write of 200 shares/2 call options for Bank of America (BAC) expiring on October 20, 2012. The reason I went the buy-write route is that you can save on commission by executing them together rather than separate. Let's...
- Put Options Explained
A lot of people hear the word options with respect to stocks and think it's a high risk venture. While options are for everyone I feel they definitely have a place in a portfolio. I prefer selling put options to call options which I will explain why...