By Don Fanstone, Member, Kitchener/Waterloo User Group
Today:
Purchased 5 July 42 Calls on ENB at $11.95. The pipelines will continue to do well, wherever the price of oil settles.
Purchased 5 July 56 Calls on BAM.A. Brookfield came off today in a rising market, not an auspicious start!
RY along with all of the banks received a downgrade and took a hit last week. By rights, the position should have been closed, but decided to hold on as RBC is a strong dividend paying stock, and did not see it going lower. Have been vindicated over the past two days, although, still in a loss position.
IPL continues to climb. Holding shares and July 27 Calls. Still a BUY.
CGI Group sold off today; but stock price is still in the Upper Channel of the Star Search. If it falls tomorrow, may close to save the profit in hand.
GWO has moved up and will report Earnings Feb. 11.
AVO continues to climb smartly. Holding July 14’s.
STN (Stantec) is an engineering firm that I have held for some time. Under water at the moment, but a smart move up today. If it continues to climb, Buy July 27’s.
DISCLAIMER: Options trading involves risk and is not suitable for everyone. The information contained in this Blog is for education and information purposes only. Example trades should not be considered as recommendations. Options training is strongly recommended before placing any trades. VectorVest offers a basic options course online and occasional intermediate options workshops in Canada each year.
Don
Thanks for posting your options trades for us to view. I do have a couple of questions for you about what you look at for volume and open interest. When I look at these options I see very little on both and just wondering your take on these and what you look at and need to see before you buy. I only buy options in the USA because of this..your thoughts
Thanks
Sherry
Don
On ENB did you mean the July 52 calls? My broker shows the 42 calls at over $20.
Hi Sherry:
You’re correct, there is little open interest in Canadian Options. To this end, there is a market maker, and when I make a trade, I usually take the bid or the offer and I am filled immediately. This doesn’t leave any room to negotiate, but it has worked for me.
I have made the decision to concentrate on a few stocks here in Canada, and for the most part, I have prospered. The USA market has many many opportunities and maybe there will be a change at some future point, but for now, I follow Canada and eliminate currency concerns.
Thanks for your interest.
Don
You wrote: “Purchased 5 July 42 Calls on ENB at $11.95.”
Could that be 52 instead of 42? The bid-ask at 42 is about 20 and there is no open int at this time.
On the USA side, I see no 42 option.
Don
Great thanks Don, just wanted your take on that, sounds good ..
Sherry
Bob, Gillies:
Mea Culpa: The spell check does not review the option values posted! Glad to see that those of you who read these posts are on your toes. I will endeavour to be more vigilant!
Don
Hi Don
Thanks for the Option Information- “appreciated
Questions–
ENB you said July 42 Calls @11.95 — I think you ment July 52 Calls @ 11.95 ?
Also I am curious why the 52.00 strike when you could have got a Delta of ..97 at the 58.00 strike ?- is there a reason for going to the 52.00 ? and not something a bit less expensive?
Also you told us that you bought BAM.A July 56 strike but did not give us the Premium amount — I assume +/- 9.70 ??
Again you could have bought the 62.00 strike and still got a Delta of.97
Don, I am not trying to second guess your trades – just want to understand why the Strike ‘s you took Would like to know the reasoning behind your selection- Again Thanks for shareing your Trades
Bob:
You are correct when you point out that a higher strike would have provided a lesser investment. As the strike price moves closer to a delta of one, the value of the strike plus the premium comes closer to the actual price of the security. Keeping the difference to a minimum is an ideal situation and sometimes I choose to buy an option that is closer to a delta of one. Not a hard and fast rule. VV recommends buying call options with a delta of .80 or better.
Hope this helps, Don
Thanks – I remember Kevin Crowe saying that he wanted a .85 delta as a minium – and others (i think Jim Penna @.80 ) Thanks again for your input