Option - a close call

Yesterday I tried my hands at Option trading - 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


Conclusion

It's highly risky and darn expensive (commission USD30) to trade options on Saxo.

I sized wrongly. I could have lost my entire premium if US market failed to slide before the option expires (the slide came today, I am lucky or what?!). 

Yeah and it would make a pretty expensive hedge. So phew...
🤦


You have got the pun in my title.

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

---

Gold slide. Investors are moving into cash again.

***
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Comments

  1. 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. Hi Quentine,

      Thanks for the heads up!

      Delete

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