When I sent you my video on Thursday of last week, I gave you an exercise to try.
But I know it might have been too time consuming, so I took the liberty of doing it for you.
In last week’s video, I told you to pick some options for some of the big companies reporting earnings this week…
And just watch to see how they do after earnings are announced.
Three of these companies reported yesterday: Pfizer (PFE), Microsoft (MSFT) and Google (GOOG).
So today I want to present the results…
First up we have Pfizer (PFE). At the time, the stock was at $27.50, so for this exercise, I picked the February 16, $27.50 calls for 92¢.
Those calls are currently worth 48¢. That’s a big loss.
Next up Microsoft (MSFT). Last week, it was at $406.35, for this example, I chose the February 16 $405 calls for $12.35. Those calls are at $6.80 now. Another big loss.
And finally Google (GOOG) was at $153.73. Again, for this exercise, I chose the February 16 $152.50 Calls for $1.35. That call option is now worth 51¢. Big loss.
A few bonus picks:
- Boeing (BA) – with such bad news, I selected a Put on this on, February 16 $200 Put for $6.90. That put is now worth $1.49.
- Qualcomm (QCOM) – February 16 $155 Call @ $5.80. It’s worth $2.19 now.
- Amazon (AMZN) – If you had bought the call for $6.40, it’s now worth $5.80.
- Meta (META) – $395 call @ $16.40, now worth $16.20
My point is that not one of these worked.
The point of this exercise was to prove the point that options buyers are getting killed more than ever, because premiums are going up.
So who’s stuffing their pockets more than ever before? Options sellers!
Options are a “zero sum” game. That means that for every loser, there’s a winner — for every buyer, there’s a seller.
When you’re a seller, you get paid instantly. As soon as you enter that trade.
The lesson is this: The statistics show us us that options buyers are getting killed.
And there’s a better way to do it: Stay on the sell side.
And if you want to hear how I’m doing that, check this video out.
Trade well,
Jack Carter
