Turning $5,000 into $400,000..UNREAL

By Brett Goldstein on Apr 19, 2008

I was contemplating it all day. To take options in Goog or not prior to earnings. I ended up playing the safe side and taking no risk at all. I am kicking myself now. If you were on margin with $5,000, you would have $10,000 in buying power. If you would have thrown it all into Goog April 500 call options it would have turned into almost half a million!

These plays happen a few times a year. The last time I actually did get into it but sold early and missed out on several tens of thousands of dollars. It was the day where bidu gapped up and fell about 60pts. I had bought 15 puts when the stock gapped up and sold way to early. I will never forget that day.

If anyone has been very efficient with buying or selling calls or puts leave some comments because Im always looking for new strategy’s.

This entry was posted on Saturday, April 19th, 2008 at 11:23 am and is filed under Annotated Analysis. You can skip to the end and leave a response. Pinging is currently not allowed.

8 Responses to “Turning $5,000 into $400,000..UNREAL”

By fortune8 on April 19th, 2008 at 8:47 pm

I hear ya! For someone who has been playing options, I am not sure how I missed that.

By Thomas S on April 20th, 2008 at 7:47 am

What was the price on the Goog APR 500 CALL options? I don’t know where to go to look up historic option prices.

By Steve A on April 20th, 2008 at 7:14 pm

I know what you are saying. I had a limit buy in for just one May 500 Goog Call for $5.50 and I didnt get filled. It was so close. Friday the call closed at around $48!!! I agree these are some unbelievable moves. I think maybe next time go ahead and do it but dont risk so much. This way if you get crushed you dont lose all your funds. BTW, I think GOOG is going to run to $600 so there is money to be made in the stock still.

By Allen on April 20th, 2008 at 7:31 pm

To answer Thomas S’s question about the price of the APR 500 calls, they ended Thursday at about 60 cents per contract. At the close of trading Friday, they were then worth about $40 per contract. The 510’s were about 30 cents and the 520’s were about 15 cents I believe. I was tracking the options on Friday, and the maximum profit for any of those (that I saw) was about 13,000% (130x price paid). Although on another blog, it said 170x was the highest point during the day.

By Learner on April 21st, 2008 at 1:31 pm

Are there any good resources out there for learning options and how to utilize them?

thanks guys.

By Paul on April 28th, 2008 at 9:49 am

Seems to me the safest way to trade prior to the move was a strangle. Buy at the money call and put. Stock moved enough that even losing on the put side, good money was made on the call. Suppose the report would have been negative, on the other hand, and it went severly down. Good money could have been made on the put side after the call side loss. In hindsight, buying the call was the right side, but there is no way of knowing. Could have just as easily lost the call money. Just my opinion after years of being bruised playing options on both sides of the mkt.

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