I bought a $150 call on NVDA expiring 10/18 about a week ago. Usually when NVDA would go up 2% my contract would go up around 15%. However, today NVDA is up 2% and my contract is up only 3%. Does anyone know why this is?
Edit: it looks like all the call contracts are up only a little today, not just mine. Why is that?
Posted by OJpopsicle
5 Comments
As the stock rally’s vol comes in… earnings are tomorrow so vol is jacked, higher vol means less gamma so the calls won’t move as much
What was the share price when you bought the contract? Contract price is dictated by demand in the contract itself and longer contracts are likely to have less movement than shorter ones due to lowered IV especially so far OTM currently. I have $129 calls that expire 8/30, 9/6, 9/13, and 9/20. They are up 12.5%, 9.75%, 7.87%, and 5.78% respectively at the time of writing this.
Options can appear to move a lot if:
1) The bid-ask spread is wide and contracts trade at the bid and then at the ask
2) The options are illiquid and a current trade The last trade took place at a very different underlying price
3) The most common reason is that implied volatility is fluctuating day to day, especially if an earnings announcement is approaching.
My NVDA 09/20-200 calls went down a little when the stock price was at session lows then it lost like 30% at sessions highs. Needless to say, I am thoroughly not impressed. Normally they have been tracking nicely with the stock price. Not at all today.
not sure if anyone else pointed out another thing to watch out for.
you buy an option at the ASK price.
you sell your option for the BID price.
also, you mention nothing about the greeks of the call you bought. you should know the delta your’s has. which means the value your option should change, when the price of the stock changes.
right now, i see a delta of 0.29. seven days ago, nvda stock was at 124. so it went up 4 points. so your option maybe should have gone up $1.2 in value.
does that match up with what you’ve seen?