Investing

Reading options quotes

  • Last Updated:
  • Apr 19th, 2020 10:08 pm
[OP]
Newbie
May 23, 2017
7 posts

Reading options quotes

The quote for the SPY Dec 2022 300.000 call can be found at the following link. The price is 31.05

https://au.finance.yahoo.com/quote/SPY2 ... 6C00300000

Say I want to invest 100k, hold the option until just before expiration and say the S&P goes up to 350 by that time.

So according to my calculations I could buy N=100k/(31.05*100) options contracts and the profit I would make would be N*100 shares*(350-300)=$161,030 (not accounting for fees).

Is this right?
3 replies
Deal Fanatic
Jun 27, 2007
5502 posts
1952 upvotes
it's correct

and if the market closes at 300, you will lose 100K. puff, gone.
It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃
In Fed We Trust - Make ES Limit Down Great Again!
Newbie
Jan 30, 2014
23 posts
7 upvotes
Not quite... profit I would make would be N*100 shares*(350-300-31.05)
Deal Fanatic
Jun 27, 2007
5502 posts
1952 upvotes
KookiMonsta wrote: Not quite... profit I would make would be N*100 shares*(350-300-31.05)
I think OP meant 160K as proceeds of sale with 100K being book cost.

Quick hack is to deduct premium paid from the width of the spread and multiply by shares owned.

Personally, i dont like the idea because of low probability. Freezing 100K for 900 days to make 60%... there are better opportunities with VIX at 40.
It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃
In Fed We Trust - Make ES Limit Down Great Again!

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