Chris- Earnings will be announced on May 14.
I'm not sure I'd sugggest the May 10 call. The premium is much too high. The best way, IMO, to play call options is to buy the nearest expiration data, while getting a strike that will hopefully be in the money before expiration. The most important thing that I've learned is to keep the premium as small as possible. That way, you can buy more of the same
{forgive my misspellings, but my browser is not letting me seee what I'm writing, ). As I was typing,/saying, bif I were to buy optoions ot
any more options (aside from my march 10 calls) I might consider some at 12.5, perhaps the march 12.5. I don't know offhand, since I haven't checked, but I imagine that these options have not begun to respond to the stock's movement. If you believe that a buyout will happen, and the stock will rise to more than 12.5, you will make a bundle. But if you get a may 10 for a premium of 7/8, which which is probably more like $1 with commisions, and the stock moves to $20 before may, you will realize a 10-1 return. Not bad at all, but if you wanted to play $1000 on the may 10's, you could buy only 10 contracts ($100 each). If you sold them when NM reached $20, you would make close to $10000.
But, if you can buy a march 12.5 for a premium of 1/8, lfor example, you might get about 65 contracts for your $1000, and if the stock got to $20, (albewit you won't have 3 months) theyou could sell them for maybe $7.50 or $8 per contract, giving you a return of 50-1.
That's what I'm gonna get if the stock gets to $20 before March 22. The risk of playing short term options is that you are more likely to lose. But that's the name of the game. You just keep going, from one expiry to the next, hopoing something happens. I've been doing this on NM since November, and have failed so far. That's okay, becuae if I lose $3000 on worthless calls, but get $50000 this time, it'll be woth it.
I'll try to write more when I can see what I'm doing.
Godd luck.
TDW |
