Like everyone over the last year I've started taking some extra cash and investing it in the market. Been fairly reserved in my buying but am guilty of some meme stock purchases but luckily enough I got in early
and am still positive given recent events. Over the past few weeks I've started exploring option chains, calls and puts. Well this morning I decided to pull the trigger
and purchase a call for $REI. I thought I had looked it over correctly and understood what I was doing, but as soon as I hit submit I had a bad feeling. I'm using money I can stand to lose and only spent $34.31 on the contact for FEB18 $2.50 Calls. Since purchase this morning it has lost $11.00, though $REl has gone up +0.26 points. Could someone kindly explain why that is? My statement says “you sold opening transaction (REI) FEB 18 22 $2.5 (100shrs) (cash)
I was under the impression that buying ITM calls are more expensive, but more likely to pose a profit as long as it stays above the call price of $2.50. Also what does it mean by, ” you sold …” in my statement. I thought I had “buy to open” marked when I purchased this, but maybe it was “sell to open”?
I know I know, true smooth shit but this was more of an experiment than anything and just wanted to see what happened. Now that I see what's happened I have
questions. I'm totally open to criticism and realize I still don't know what I'm doing.
I also currently hold 100 shares of the above stock with a basis of $2.37 and in my positions it’s calling my call options purchase a “covered call”.
Anyone have any input? Thank you!
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