Option - a close call

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Yesterday, I tried my hands at Option - bought a VIX call option contract that expires in 1 week.




Background: "An option premium is the current market price of an option contract. For stock options, the premium is quoted as a dollar amount per share. It depends on the price of the underlying asset and the amount of time left in the contract.
Option price above was opened at $4.90, closed at $5.25."


Facts about Saxo's option:

- American style
- Settlement: physical
- Contract size: 100
- Commission per option $3+


My Lesson

As you can see in the snapshot above, I have sized terribly wrongly. 

I could have lost it big if US market failed to slide before the option expires (the slide came today, I am lucky or what?!). Yeah it's a really expensive hedge. So phew...
🤦


You have got the pun in my title.

Oh well. Better stick with plain vanilla EQ and CFD.

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Gold slided. Investors are moving into cash again.

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Thanks for reading!

Disclaimer: Contents of this blog are personal opinions and NOT financial advice to buy or sell any mentioned securities, commodities or assets.

Comments

  1. Fang Han03/04/2020, 21:18

    Saxo overcharges for options, they charge for currency exchange, contract opening and closing. Compared to IB, they charge a flat USD$1 per option, nothing else.

    ReplyDelete
    Replies
    1. Rainbow03/04/2020, 23:52

      Hi Quentine,

      Thanks for the heads up!

      Delete

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The contents of this blog are author's personal opinions and do not constitute advice to hold, buy or sell any securities, commodities or assets mentioned. I do not guarantee the accuracy and reliability of any information provided, and shall not be liable for any losses incurred from reading my posts or using the materials herein. This blog may contain affiliate links to external sites.