Some links and calculations for index options pricing:
Link for all the CBOE Dow calls/puts:
webservices.pcquote.com
Tonight, the Sep 8800 Dow put (DJXUJ) closed with an ask of
13 1/8 = $1312.50. Therefore, you will make money if the Dow
opens the third Friday of September below $8800 - $1313 =
7487. The time premium must have gone up since I posted
last time. Anyway, if the Dow opens that day at 7553, you
will end up with $8800-7553=$1247, or a 5% loss. If the
Dow opens that day at 8200 - 30% = 5740, then you will end
up with $3060.
Same thing for the CBOE SPX calls/puts:
webservices.pcquote.com
Tonight, the Sep 1125 SPX put (SPTUE) closed with an ask
of 189 1/4 = $18925. Therefore, you will make money if the
SPX opens the third Friday of September below 1125 - 189.25
= 935.75. The SPX closed today at 921.13, if it was at that
value again on that fateful fall day, you would end up with
(1125-921.13)*100 = 20387.00, a reasonable 7.7% return.
In the event of a 30% correction from its peak of 983.12,
your return would be (1125 - 983.12 * .7) * 100 = $43682,
a handsome profit of 130.81%.
The SPX put looks like a better deal to me. (BWDIK)
Of course, in either case you could lose all of your investment,
but at least you wouldn't have to worry about a margin call.
-- Carl |
