Replies to post #1740 on Micron Technology (MU)

[JLS]

Duma,

The profit on your options-only trade should be calculated by only using the option's price and not the price of shares of stock. Owning stock is not part of the trade. Your only investment is the initial cost of the Calls.

Therefore, your profit on the options trade is:

1.18/1.52 x 100 = 77.63%

Owning shares is a separate trade.

Adding options gain to stock gain could be called your portfolio gain, and that would be your 7%.

[Duma]

My charts say the MU pb is over. As posted I closed out my call at 41.38 and sold a covered call for .92. Later I got nervous, so I bought a 40 put for .55. This guaranteed my max loss to be 40-41.38+.92-.55 = -1.01, -2.4%.

I closed out all the options this morning with MU at 41.33 (12:04), so my actual loss was
-.05 on stock (41.33-41.38)
+.29 on call (.92-.63)
-.33 on put (-.55+.22)
for a net loss of -.09. I consider that a win

I could have just sold my shares and avoided all this trading, but this is something I haven't done too much of and wanted to try it live for a bit.

So now my 100 shares have no options against them and I bought an additional Oct27 40.5 call for 1.64 with a delta of 64%. So at this point I have a long exposure of 164 shares. If my timing is right so that MU moves up, so will the delta. By the same token, the delta will decrease if prices were to move down.

I could easily be wrong on this, so will have to react fast if price turns around again.