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k-man: Trade Notes

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Trade

Bought to Open 1 QML BV at 0.20

k-man posted on 01/14/08 at 12:32 PM (Note posted about 4 hours after the trade)
Trades | Notes | Blogs
Users Bought (30 Days) 0 (0%)
Users Sold (30 Days) 0 (0%)
Market Cap 0
52-Week High 0.00
52-Week Low 0.00
10 Day Volume 0
P/E 0.00
EPS (Trailing 12 Mos.) 0.0
1Day 5Day 1Mo 3Mo 6Mo 1Yr

Transaction: Bought to Open
Symbol: QML BV
Quantity: 1
Price: $0.20
Value: $20.00
Stop Order: No @ $N/A
Target Price: $0.35
With Q4 earnings to be announced at the end of the month, I believe this option will gain value on a strong earnings release and reaffirmation of 1.76/share in dividends for 2008.  And for $20, I believe it's worth the gamble.
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Posted by k-man on 01/14/08 at 12:32 PM

Tag It | 1 user tagged it: qml bv, mcgc, option, call, earnings

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User Avatar TradeKing Staff Member

NicoleWachs

Member since: Jul 07
Trades Not Shared
Trade Notes 0
Blog Posts 20
Director of Education for TradeKing
Age: 30's
Boca Raton, FL UNITED STATES
NicoleWachs
Posted January 15, 2008 (05:15AM)

K-man,

Thanks for your trade note on your recent call purchase. Buying out of the money calls can be tricky, but it sounds like you are doing it responsibly in only risking $20 on this trade. Nice job on not betting the farm on a low probability trade.

Another way to think about this is to check the Delta of the option. For example I may ask Brian Overby, "What's the Delta (probability) of the Packers beating the Giants on Sunday?" He may respond "80 delta" since he is from Wisconsin. (GO BIG BLUE)

In the case of your trade, these calls have a very low delta. This means that the option price will not change much when the stock moves. Additionally, a low delta may indicate a low probability of the call finishing in the money at expiration. Despite his choice of football teams, Brian has a great blog series on Delta.

http://community.tradeking.com/members/optionsguy/blogs/2109-understanding-delta-i

It is possible that your trade may turn out to be a winner. Delta is only one thing to consider when placing a trade. You need to evaluate every situation and make decisions based on your own risk parameters.

You may also want to check out TradeKing's Options Playbook for more on this strategy. https://www.tradeking.com/PrivateView/edu/opb/opbLongCall.tmpl

--Nicole Wachs

TradeKing Staff

Training and Education Manager

Options involve risk and are not suitable for all investors.
Please read Characteristics and Risks of Standardized Options .

While Delta represents the consensus of the marketplace as to the theoretical price movement of the option relative to the underlying security there is no guarantee that this forecast will be correct.

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