As I wait for my position to hit its price target, I have become very curious about options. Phil Davis, a contributor on Seekingalpha.com has run a virtual portfolio since the beginning of this year where he turned $10k into $100k. That was enough for me to start thinking that I should at least learn more about this option thing. As of today, my knowledge surrounding options is limited. I know they expire, you can make a lot of money fast and you can lose everything. That's about it.
But before I start, I want to toot my horn a little and tell everybody that I am now in the top THREE PERCENT of fund managers at MARKETOCRACY, where I am outperforming 97,000 other members (there are approximately 100,000 members).
OK, back to the options experiment; I hold a position in YUM in my Marketocracy account and I fully expect it to go go at least 25% higher in the next 6 months. Yum owns and runs Fast food restaurants like Pizza Hut, Taco Bell, and Kentucky Fried Chicken just to mention a few. Even in these tough times, they continue to grow revenue. Revenue is something you should be looking at nowadays when you are doing your DD. Anyway I chose them because of good fundamentals and their liquidity, as far as options go.
The Play is the July $60 calls which are $3.6, buying 10 contracts; total investment $6360.
Now, back to the business of doubling my account in less than one year.
Start date: 12/12/2011
Starting balance: $10k
Current balance: $11,785