What is the best way to examine share price and option price movements to make ready for an option purchase?

Question

I am thinking of watching day highs and lows for in the money calls and puts for several symbols and going from there. Is there anywhere I could find historical charts and data on such things or will I have to tough it out and retrieve data over a period of time?

I realize I could use some sort of calculator, but doesn't the volatility figure into the formula for options value?

Answer 1

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If you want to look at past price movements a chart is likely to be the best way to do so. I am not sure how that would make you ready to buy an option.

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You can get historical charts at BigCharts. For example, here is a basic chart on the GEAH option.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ge%3Dah&sid=0&o_symb=ge%3Dah&freq=1&time=4&x=28&y=16

(Note that you need to include an "=" before the last two characters in options symbols at that site.)

You can use the advanced chart facility to compare the movement of the underlying with the movement of an option if you wish.

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I agree that since implied volatility contributes to the price of an option it would be difficult (and inaccurate) to use an options calculator to determine prices of past trades.

There are also times when the value of using charts is questionable. For example, if the underlying drops 20% in a day, say from $25 per share to $20 per share, and there is only one trade for a particular option on the underlying that day, it could make a big difference in the price if the option was trading $25 or $20.

Answer 2

Before deciding to buy a stock, I advice you to check the intrinsic value of the stock. You may check from http://sharevaluecalculator.com