Option for RIO

[schecter85x]

I Know its my first post but I just wanted to know what you guys think of a call option on RIO with a strike at 30.00?

[Thierry Martin]

:welcome:) to OnlineTradersForum.com schecter85x!

[schecter85x]

Thanks, I'm glad I found a forum like this one, I used Zecco's but this is the summary for that.... : It sucks, one post every 2 weeks, and with market volatility, that doesnt help its cause.

[netwrangler]

I Know its my first post but I just wanted to know what you guys think of a call option on RIO with a strike at 30.00?
I have been a fan of [and investor in] RIO for 20 months now. I have benefited from that relationship.

That said, there are some cautions:

Commodities in general are under attack by the Bears, who claim that recession in the US will dampen demand worldwide. Moreover, the building rate in China will slow after the Olympics. These factors will combine to slow the growth of RIO.
RIO's proposed takeover of Xstrata will be a stretch in the current credit market. I'm sure there are some who would value RIO higher if the take-over did not go through.
But that was the same thinking that preceded the CVRD [RIO] INCO merger. Folks who bet against RIO then lost out. RIO was able to finance the deal.
OK, today's credit and commodity markets are different. Still I am reluctant to bet against RIO's management. Go or No Go, I think RIO will be on the right side of the decision.

So, you ask about buying a RIO 30 call. The obvious question is, for what month?

Well, RIO is volatile enough to support trades in that call in any month. But if you are using the call to take a long position in RIO, I think I would go out at least to March, if not June. I'd cheerfully bet you a lunch that RIO will go above $35 between now and June. If you are ready to trade when that happens, you will profit handsomely from your RIO 30 calls.

[schecter85x]

I noticed I forgot to post what month, I have this feeling b/c Ive always been good friends with RIO that there will be no problem reaching 30, but I still want someone's opinion, I was thinking march option, perhaps June, like I said I can see RIO going to 30 with no problem, but with the market the way it is and people panicking over the most ridiculously crap it's a bit scary but I do need to cover some recent losses from AAPL ( which I bought in at 172!)

[netwrangler]

I noticed I forgot to post what month, I have this feeling b/c Ive always been good friends with RIO that there will be no problem reaching 30, but I still want someone's opinion, I was thinking march option, perhaps June, like I said I can see RIO going to 30 with no problem, but with the market the way it is and people panicking over the most ridiculously crap it's a bit scary but I do need to cover some recent losses from AAPL ( which I bought in at 172!)Sounds like we are together on our thinking. Let's keep in touch on this thread.

I plan to be buying RIO March Calls, but I'm thinking more like $27.50. Should be an interesting week.

[schecter85x]

Let me know what you decide to do, honestly, I can see RIO hitting 27.50 tomorrow

[netwrangler]

Let me know what you decide to do, honestly, I can see RIO hitting 27.50 tomorrowI'll be in the chat room at the market open. I'll post my trades in RIO and/or RIO options there in real time. Hope you can join us.

If you can't join us [for some stupid reason like work] then we can trade posts.

BTW: what time zone are you in. I am in the Pacific time zone. I have lots of time to trade before "working hours".

[schecter85x]

I'm EST Time, I MIGHT MIGHT be able to, I was thinking about doing 5 contracts for march options, 30, It's only like 325$, and Im almost certain itll hit 30$ with market volatility and I think this stock has already hit the bottom (Cramer thinks so too, although I like to base my opinions off true research and not an over-commercialized analyst) I would probably sell as soon as stock hit 30$ so I wouldnt risk it more... and so it would be 1500$ earnings minus 325$ sounds pretty good to me

[schecter85x]

okay my mistake March options are like twice as more expensive I was looking at feb

[netwrangler]

okay my mistake March options are like twice as more expensive I was looking at feb
Your choice, of course.

I tend to be conservative — odd words to be sure, from an options investor. I figure buying MAR 30 calls gives me through mid-to-late February to have something good happen. Buying FEB 30 calls means something good needs to happen pretty quick.

I know, we just hit a bottom today and everything is going straight up starting tomorrow.
But...just in case that doesn't happen...I'd rather have a little more time for the finance gods to intervene on my behalf.

[schecter85x]

Im trying to log into the chat but the screeen wont load but I told you it would hit 27.50 today! already at 28!