PLS (ASX) PLS chart

Originally posted by dunnomuch: ↑

the market is down now about 0.8% and PLS is around 3.4% down, that is a high Beta stock doing its high beta thing which is that it moves more than the market either up or down. Because it is a high beta stock the volatility is high at 55% or so. With high volatility you get more bang per buck on an options trade.

Yesterday at a share price of around $5.08 I sold September $5.50 calls for 15.5c against my stock (covered calls) today I'm currently trying to buy them back for 8.5c so a profit if 7c or about 1.4% of the stock price for holding 1 day. If PLS rallies then I'll re sell covered calls at $5.50 for another 15c hopefully taking the position to 22c profit on top of the other times that I've rolled the position this month so total profit will be closer to 50c for the month without actually trading any of my shares. If the shares get exercised at $5.50 then my actual breakeven is closer to $6 as the premium has been extracted a few times over. Those shares that I'm using were bought at $4.92 at the start of the month, sold for $5 when the price hit $4.60 using a put option bought when the price hit $5.30 or so in the first few days of the month so didn't cost much, I think 8c so that left about 30c per share profit as I bought them back at $4.6125. I then bought a $4.60 put which I rolled up to $4.80 yesterday for a net cost of 7c, thats now worth 16c if I sell it today or hold on in case PLS breaks $4.60 again... if it hits $4.60 again then the option will exercise at $4.80, the calls will be bought back for almost nothing and I can then sell puts at $4.71 (European series so I can control when they get exercised) and roll up that position as PLS gradually increases again throughout the year. American series end in a zero usually, $4.60 as an example, it can be exercised at any time during its tenor (duration until exercise date). $4.61 would be European and exercisable at a specific date, august 17th is the next monthly exercise date but there are also weekly options, 3rd, 10th, 24th of August.. So if my PLS shares exercise at $5.50 then I have bought them for $4.6125 plus all the other premiums along the way. If that happened I'd just buy them back and reset costs etc and just rinse and repeat. Obviously there's a bit of tax involved in the final outcome...

The high volatility means that something is always likely to happen, you can protect against this to an extent using theta or time value of money. As PLS is always moving, the volatility creates all sorts of pricing things so you can hop in or out of a long or short position and sometimes you lose a bit and sometimes it magnifies the other way, because the general trend of PLS has been up it allows theta to come to your rescue and throw an options contract far into the future to generate a credit to reset your losing position etc. at any point in time I have ZERO idea where the price will finish up and luck seems to be just as important as a good chart. I think that's the first time I've ever detailed how I trade anything, it's more just as an example of how you can use underlying stock rather than just watch it move up or down.

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That is so freaking brilliant. What an amazing a detailed explanation. I am way impressed as I hadn't even thought about any of that. Just shows there is always something new to learn. Damn. That is clever.

No.	Vol.	Price($)
18	321604	$3.06

No.

Vol.

Price($)

321604

$3.06

Price($)	Vol.	No.
$3.07	269930	12

Price($)

Vol.

No.

$3.07

269930

No.	Vol.	Price($)
6	98240	3.060
13	82683	3.050
13	75513	3.040
10	29960	3.030
20	88646	3.020

No.

Vol.

Price($)

98240

3.060

82683

3.050

75513

3.040

29960

3.030

88646

3.020

Price($)	Vol.	No.
3.070	400	1
3.080	7280	2
3.090	11600	2
3.100	66993	13
3.110	237299	9

Price($)

Vol.

No.

3.070

400

3.080

7280

3.090

11600

3.100

66993

3.110

237299

(20min delay)
Last $3.06		Change 0.040(1.32%)		Mkt cap ! $9.210B

Open	High	Low	Value	Volume
$3.04	$3.12	$3.02	$47.88M	15.58M

PLS chart, page-16944

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