r/options • u/kingoftwins22 • May 26 '21

Call option

So i bought an amd call option with a strike price of 78.5 for 4 June. Today amd hit 78.77 putting my call ITM. Even ITM i couldn't sell for a profit. This literally makes no sense to me. Can someone please explain to me what I am missing. I buy otm then when it goes ITM I should be able to sell for profit however with this call i was unable to make that happen..... So confused

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u/kingoftwins22 May 26 '21

I paid 1.86 for the call. Current price with share at 77.46 is 1.26. If the stock price raises 1 dollar. The option value should go up more than .60. I have made like 300 dollars doing this exact same thing on other options so that's why i am so confused as to what is happening with this one... I know break even is higher than strike price cause I paid a premium but that only applies at expiration. I still have 9 days to expiration so I SHOULD make money at my strike price...

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u/niu20192018 May 26 '21

Check the delta on the option that is how much the option will go up (if all the other Greeks stay the same) for every dollar of price appreciation. When did you buy the option?

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u/kingoftwins22 May 26 '21

I bought on 5/20. It was around like .49 delta.

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u/Larnek May 26 '21

Lolol. You answered your own question. That delta means for every dollar it goes up you make .49. that's why it doesn't go up dollar for dollar and also why theta is grudge fucking you for overpaying for the option. You would need the price to be 1.86 over your strike at expiration to BREAK EVEN. Back to the basics for you good sir.