The CME is Basing?

CME Group (CME), the world's largest futures exchange, had a large run up earlier this year (from $154 in January to almost $350 in June). Since then it has corrected roughly 25% (to a low today of $258.29),

The stock sold off this morning on news that the CFTC was considering position limit changes on oil trading. The stock has since recovered to $267.37 a share. This is the second upside reversal the stock has had in the past couple of weeks. Today's low was higher than the low of the last upside reversal day.

The CME is currently just above support.

Accordingly I decided to add to my position. The August 260 call was quoted $16 bid offered at $16.5 a few moments ago. It has a dela of a bit over .5 since the call is slightly in the money.

I opted to purchase the stock instead. The stock has a delta of 1 (logically) and has no Theta (time decay) or Vega (volatility change) risk.

Let's assume that I purchased the August $260 call at $16.5 and follow the trade over time. I will compare the stock purchase I made with the call option purchase I could have made to give you some idea of how trading options is different from trading stocks.