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Well, further out options are not cheaper, they may trade at lower IV, but it doesn't mean that they're cheaper than the front month. Besides, further out options have lower Gammas so they're slower to respond to the underlying's move.

Basically, the reason, as Ursa has pointed out, is volatility crush/drop after the announcement. When you buy a straddle coming into an event the IV is inflated so you're buying expensive options. In other words, when you buy a straddle what you're really doing is betting that the subsequent...

I agree with Ursa on that. Buying straddles to play eanrings or other volatile events is not as easy as it may seem. On average, you'd be lucky to breakeven.

How about: "Where did my option go, I just bought it last week!?" :D

There're one week options.

Actually that is not totally accurate. TOS does have an approval process, it doesn's have trading levels. So as long as you're approved for options trading you can trade any strategy you want. There's no that: "Oh, you are on level 2 so you can only buy options"....crap.

Sure it can be done. Anything is possible. I know a guy who's been writing options for a decade and never had a losing year. However, it is not as simple as it may look, as all other trading strategies it requires great discipline and planning, no exceptions. By the way, if you don't...

This only applies to equities. If you day trade stocks then you get 4 to 1 margin. Futures are not part of this.

Correct me if I'm wrong, but in order to get 4:1 margin you need more than 25K, if your equity is below that you get only 2:1.

Yes, you can reverse the Black-Scholes or any other option pricing model to solve for Implied Volatility. I wouldn't recommend doing that by hand though. Any decent option calculator should be able to do that for you.

Does your colleague realize that he/she could have done exactly the same trade with calls and have no early assignment risk!? That is, selling a 42.5/50 put vertical is exactly the same as buying a 42.5/50 call vertical (i.e. 42.5/50 bull call spread). It has exactly the same payoff! By the...

But then again, why would I utilize your sentiment analysis on a PDA, which is obviously a propriety tool, if I don't use it otherwise (i.e. when I'm at my desk), you know what I mean?

It looks really great MAESTRO. The problem I see is that if the sole purpose of this app. is to keep an eye on the positions while you're away, then why pay for it when some brokers provide such an app. for free.

If you short the stock, then why in the world would you want to short the calls as well?:confused:

Which leads to the next question. If he/she doesn't know all this stuff then how in the world did he/she get the job in the first place?:eek:

As the stock moves long gamma generates delta, which then let's you profit from the move.

Without going into all the details, the way to play calendars as a directional bet is to set up OTM calendars. E.g. the stock is at 50 and you think it will go to 55 by some specific time, so can enter a 55 call calendar, thus creating a directional calendar.

It would be hard to find European-style equity options. Unless you meant some other style.:D

I'm not sure it will be all that great. Market makers will suffer and the retail traders are sure to suffer from it.

You could use deep ITM Leaps as a stock replacement. That is, you buy Leap calls with Delta of 0.8 or more and a year or more to exipry as a substitute for long stock.