Earlier this week, the Dow Jones had nearly reached the lowest point of the year. If this is now the beginning of a general uptrend in the markets, we will be seeing some call option plays soon.]]>
The story continues in the next entry (probably above this one.)
We should probably learn spreads soon.
In selecting this particular option, we learned to use the delta parameter in a linear approximation to how the option price changes with respect to the underlying stock. As such our ROI calculations are more accurate since now they can take into consideration the time value rather than just the intrinsic value of the options. Soon we will break out the pad and paper and use the gamma parameter to calculate option price acceleration.
We are not going to exit this play yet. Since the price is above average, the trend is turning, and may bounce off the 30-day m.a.
We were torn between paper-trading and purchasing the options, so we invested a smaller percentage into this speculative play.