SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Canadian Options
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Clark Kent who wrote (1581)7/9/2010 8:23:03 PM
From: tyc:>  Read Replies (1) of 1598
 
Let me try to make a contribution to the thread;

We buy calls because of leverage they offer. I mentioned earlier that my RIM options had offered 12X leverage. What does that mean and how is it calculated ?

The option priced at C$1.60 had a delta of 38%

The "delta" indicates how the price of the call will change relative to a change of the underlying common stock. To put this into different words, the warrant will move up the same amount as the delta times the common stock price. The common stock was priced at $51, so 38% of that is 19.38, which was 12X the $$1.60 that the warrant was selling for.... ergo the call offered 12x leverage.

So to calculate leverage divide the price of the call into the price of the common stock times the delta of the call.

38% of $51, divided by $1.60.

Now, what is the leverage of the calls you hold ?
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News