Evaluate these options contract trade. I'll give you the info on both trades and I wan't you to tell me what you think based on the info what the best direction for the trade is. I tried hedging my bet on both sides, but I would like to see what you think I can improve my strategy or my trading skills. I bought two contracts for AAPL.
1) AAPL $210 Put Market value $74.00 Current price$0.74Current AAPL price$228.11Today’s return+$34.00 (+85.00%)Total return+$34.00 (+85.00%) Simulate my returns Expiration date 2/28 Average cost$0.40AAPL breakeven price$209.60Contracts+1Date bought2/7 Stats Bid $0.72 × 573 Mark $0.735 Implied volatility 28.23% High $0.74 Volume 145 Ask $0.75 × 201 Last trade $0.70 Previous close $0.38 Low $0.35 Open interest 976 The Greeks Delta -0.0985 Gamma 0.0112 Theta -0.0610 Vega 0.0952 Rho -0.0133
2) AAPL $250 Call Market value $30.00 Current price$0.30Current AAPL price$228.12Today’s return-$15.00 (-33.33%)Total return-$15.00 (-33.33%) Simulate my returns Expiration date 2/28 Average cost$0.45AAPL breakeven price$250.45Contracts+1Date bought2/7 Stats Bid $0.29 × 152 Mark $0.295 Implied volatility 23.03% High $0.54 Volume 841 Ask $0.30 × 123 Last trade $0.30 Previous close $0.53 Low $0.30 Open interest 4,235 The Greeks Delta 0.0568 Gamma 0.0090 Theta -0.0357 Vega 0.0626 Rho 0.0073
What do you think I should do. Should I sale now? Or wait later in hopes that it increases in value? I believe it could go down more? But would my contract depreciate in value? Please evaluate this trade.
Edit
Let me analyze these options trades step by step:
- Current Situation Analysis:
- AAPL is currently trading at ~$228
- You have a $210 Put (bearish position) that's up 85%
- You have a $250 Call (bullish position) that's down 33%
- Both options expire on 2/28, so you have about 3 weeks left
- Put Option ($210 Strike) Analysis:
- Currently deep out of the money (OTM) by $18
- High theta (-0.0610) meaning it's losing ~$6.10 per day in time value
- Low delta (-0.0985) meaning it only gains ~$0.10 for every $1 AAPL drops
- Currently profitable despite being OTM due to increased volatility
- Call Option ($250 Strike) Analysis:
- Very deep OTM by $22
- Lower theta (-0.0357) but still losing ~$3.57 per day
- Low delta (0.0568) meaning it only gains ~$0.06 for every $1 AAPL rises
- Lower implied volatility (23.03%) compared to the put (28.23%)
Recommendations:
- For the Put Option:
- Consider taking profits now. You're up 85% on a deep OTM option
- The high theta means time decay will work strongly against you
- The low delta means you need a significant drop to gain much more value
- The higher IV suggests the put is currently overvalued
- For the Call Option:
- This is a challenging position due to being very deep OTM
- The lower IV suggests less premium inflation compared to the put
- With 3 weeks left and significant theta decay, recovery chances are low
- Consider cutting losses unless you have strong conviction in a sharp upward move
Overall Strategy Improvement Suggestions:
- Consider buying options closer to the money (ATM) for better delta exposure
- Look for options with lower theta decay if holding longer term
- Watch implied volatility - high IV often means options are overpriced
- Consider taking profits on options that are up significantly, especially when deep OTM
Would you like me to elaborate on any of these points or explain more about the Greeks' impact on your positions?