Wednesday, January 13, 2010

Owning the right option at the right time can be lucrative (BIDU Jan calls exploded today)

No, I didn't/don't own these calls, in fact I just bought a few BIDU puts. Front month option trading is not advisable and usually leads to pain and suffering, trust me. But how else can one make over 14,000% gains in a single day? Wow, just .. wow. BIDU has always been a favorite of mine for "hail mary" front month option plays because of it's high price and ability to move, betweenthebars likes it for the same reasons I think. If we are lucky he might comment. What a home run it would have been to buy 10 of these options yesterday for $50 and sell them today for $7,000. Oh well, maybe next time.


chintan shah said...


I dont think anyone made profits by buying this option.As this option was so out of money and worth pennies since yesterday.

This is really an obtrusive question but i want to know that do you have a girlfriend or not?

pythagoruz said...

Actually chintan, the open interest was 4,454 on those, so a ton of people owned them. In total, the amount of captial gains on that one strike alone is roughly $5M and is actually greater on other options with larger price increases (but smaller %). And honestly, it would not be out of the ordinary for betweenthebars or I to buy 10 of these during op ex week as a gamble. This was not one of those op ex's, unfortunately.

"do you have a girlfriend or not?"

lol, ask me on my other blog if you really want to know.