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This stock didn't gap down because of earnings ... it gapped down because it's only drug in the pipeline failed. It had all of its eggs in one basket. Apparently the cash value at the current moment is around 3.65-3.70, but they're losing money, so I'm not sure how much that means...

Cool, would love to hear it. I guess one point to make is that by directional bias, I also mean neutral.

Well, most likely the vol on RNVS would've deflated if the news turned out to be a non-event and you would've had a winner. In your case here, you expected RNVS not to move, that forecast was wrong. You still need to take direction into account. To just say sell high vol, buy low vol isn't...

Hmmm ... maybe I entered a different option by mistake. I guess the important thing is that now you can do this. Sorry about the bad margin req value though. :confused:

Ah good, you're using IB so I can tell you exactly how to do it. Start to place the order, then right click on the order (before sending it!) and there should be a menu item that says "Check Margin". That told me $5K.

I have yet to actually try one, but a ratio spread seems to be theoretically a bit better than selling a straddle. You don't need quite so large of a move.

RNVS down 75% this morning. Glad these guys kept you out of that trade. :D

Ben, I've been having success with vertical spreads. They don't require continuous monitoring (at least not in my case). I like to open them about 1/2 hour after the market opens (and the B/A spreads come back to earth). I have a theoretical profit target based on the price of the...

Margin requirements will vary based on the underlying. A naked IWM 72 call will consume ~ 5K of margin. And now if I may interject some opinions ... This is much more of a time to BUYING premium, not selling it. The implied volatilites are very low on the indexes. If you're speculating...

Yup, great stuff. I don't think the downloadable version of TWS has it yet (although I see quotes, but I don't think I can bid in pennies).

I got the bulletin, this is a good thing (TM)

This might explain why I've been seeing some spreads on some options in IB TWS quoted in penny increments. It's only been spreads though, the contracts that make up the spread were still showing nickel increments. I hope this trend catches on fast.

Another thing I thought of that was extremely useful (and free) http://www.cboe.com/LearnCenter/webcast/archive.aspx Watch these educational videos, especially the ones by Dan Sheridan. I'm not recommending that you should follow any of them as is, but it really gets you thinking and...

I'm no riskarb, optioncoach, momoneythansens, etc, but certainly wouldn't mind sharing what I know and learning more. Feel free to include me in any dialogue.

Leverage is not my reason for using options, so maybe I can add a little value. I've been in and out of options for years, but over the last year have finally spent the time to really understand them. I think I read Shelley Nat's book a little too soon in the process and got frustrated early...

Great point. Believe it or not the SPX credit trading thread really started to get me thinking about different strategies because I was really just never comfortable with the risk. I tried to paper trade credit spreads pretty CTM to increase the likelihood of a short strike breach and just...

Great! I personally appreciate all option related journals. They're always educational and fun to watch. Looking forward to this one as well. Thank you.

I do believe in paper trading. I think it should be thought of like back testing. If you can't make money w/ a back tested system, you probably want to try something else. Same with paper trading. If you paper trade a strategy and can't make money, might want to try something else. But just...

Yes, I've seen this too but only on spreads too. If you bought the options individually, they were still in nickel increments. It may have been some sort of test because I saw it about a week or so ago for a couple of days and haven't seen it so much lately. I use Interactive Brokers.

Definitely a good point, although it certainly can't get much worse than what it is now. :D