Ken, here is an example
If you bought TXN and its options TXNBY, TXNBF and TXNBZ on 2/1/06,
your biggest gain is TXNBF for 175% (compared with 7% for TXN)
whereas you could lose 50%+ for TXNBZ.
Both of them are out of money at the time the options were bought (strike prices were higher than the then-stock price),
however on 02/10/06 the strike price of TCNBF was below the stock price whereas the strike price of TCNBZ was still above the stock price. TCNBZ will lose all its value on Feb. 17 if the strike price is still under the water.
PS: you paid a lot for TXNBY but much safer and have a decent gain of 94% :)
If you bought TXN and its options TXNBY, TXNBF and TXNBZ on 2/1/06,
your biggest gain is TXNBF for 175% (compared with 7% for TXN)
whereas you could lose 50%+ for TXNBZ.
Both of them are out of money at the time the options were bought (strike prices were higher than the then-stock price),
however on 02/10/06 the strike price of TCNBF was below the stock price whereas the strike price of TCNBZ was still above the stock price. TCNBZ will lose all its value on Feb. 17 if the strike price is still under the water.
PS: you paid a lot for TXNBY but much safer and have a decent gain of 94% :)
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