Options on Ascend:
Could someone please post the options prices on Ascend. I bought 20 april 35 calls this week at 1 3/4 and still have 10 september 35 calls I bought at 5 1/4. I need to be able to hold some more calls before this thing becomes a rocket ship and I miss the boat. I am relatively new at options play but am thinking I am better off playing say options 2-3 months out which I can purchase more of than options 6-7 months out that are more expensive because I believe our big run up is starting and 3months should be enough time. Thoughts or advice?? Also, i am holding 2k shares at average price of 37.5
A few ideas:
i] Since you are buying and not writing, your risk is limited [duh]. Nonetheless, I'd recommend that you acquire "Options as a Strategic Investment", by Lawrence McMillan (if you don't already own it). The follow-on book, "McMillan on Options", is fine but does not offer follow-up activity -- which is requisite in maximizing profit, minimizing loss. Such text is a nice starting point.
ii] Generally, the 2-3 month plan is good, b/c you're avoiding undue time premium, yet capturing a reasonable time window. As profit occurs, you can liquidate or lock it in by selling the nearer term contracts. [Example: You own 50 Jun 45C. On Apr 10, ASND is at 42.5, so you elect to sell =< 50 APR 45C. On May 4, ASND is at 47, so you elect to sell 50 (potentially, more) MAY 50C.] Alternatively, you can roll the 2-3 month contracts out (and, potentially, up) as time passes.
iii] Since you are long ASND 2K, you already benefit from a run-up. Therefore, the purchase of CALLS simply reinforces the position -- in one direction. You may consider purchasing puts as insurance for the underlying (ASND) and your calls. This requires some diligence to ensure that you don't spend all your profit potential on options.
iv] A common habit for novice options traders is to view the position as "one transaction." Naturally, it's important to set up contingencies *before* the initial transaction, identifying both favorable and unfavorable scenarios. In addition, you should be willing to liquidate portions of the position to lock profit or limit loss.
v] The obvious cliche: cut losses, let profits run.
Good luck! |
