Options Forum: Never Rich Enough

Steve, thanks for all the good stuff. I was wondering if you had any thoughts on a recent options trade. I had bought KLA-Tencor(KLAC Quote) 12/60 puts before the close on Tuesday for $3.50 with the stock just over $60. I just sold them for $7.50 with the stock around $53.30. So I got a whole 80 cents of time premium with nine weeks until they expire. That's nuts! There should have been at least $1.50 to $2 of time premium built in. There is not an ounce of fear in this market, and I find that quite frightening.

--M.B.

Don't be frightened -- be glad. It sounds like you made a great call and realized a 114% gain on your option trade. Still, there are two elements worth addressing here -- accurate projections for a potential profit and loss, and what an options pricing might be saying about investor sentiment. ...