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There are so many things wrong with this idea... I have no idea what the underlying's * 14 % * vol has to do with this or even what it is. Are you referring to HV? Whatever, its irrelevant. Option premium contraction is what's relevant to earnings. My guess is that you looked at an...

http://www.cboe.com/LearnCenter/Concepts/Beyond/expiration.aspx

Absolutely true if the put is available for a penny or two but that may not necessarily be the case because the call has a Holland Tunnel wide spread and you can hide a lot of put premium in there (if expiry is a further month and/or higher IV).

Lesson learned inexpensively :)

That will lock in a loss if the time premium received for the short call does not exceed the premium paid for the put (OP's post implies that assignment would be a break even). Even tho XYZ is not likely to drop 25 pts, for some, doing the conversion at a small loss would provide peace of...

Gaps are caused by order imbalances - usually prompted by company news. In order to meet this buy (or sell) demand, the market maker will raise/lower price until it attracts enough sellers/buyers to enter and offset that demand and that price is about where the gap open is.

If the worst case scenario maximum loss on your existing positions exceeds your account value, do you think it's possible to blow out your account? :D

This trading is done by anyone who wants to trade at those hours. It takes place on ECNs (Electronic Communications Networks) which match buy and sell orders that have the same price. Be very careful with pre/post market trading. B/A spreads tend to be wide and due to low liquidity, price...

Stock is 52 and you expect (hope) it to rise over 55. It goes to 57. 55 bullish put spread expires worthless over 55. 55 bullish call spread requires closing both sides out. Two more commissions and possibly more slippage on the B/A spread.

Good point but a little too subtle. OP: Option premium in regard to UL price is linear. AAPL is 10x higher than $42,80 so thepremium for a 10x higher strike (43 vs 430) is 10x higher. Orrrr... near the money AAPL options have an IV of approx 20%. Your call is right smack dab in the...

Buy a screen that values options higher :)

Options provide a variety of ways to profit (and lose) on your opinion of a stock. There are more complex strategies such as trading the delta or IV of of the options but that's for a higher pay grade right now :) A "good stock or index" is one where you have some success at predictng its...

Your primary concern is direction, not volatility which is gravy. Long straddles are tough enough to profit with. Buying one on one index and selling on another is going to hammer you if you get direction. An IV contraction may soften the blow. It's a bit of work but I'd look at your...

It's only capital intensive when the strategy fails. CC's are equal to NP's and they have low initial margin requirements. But as I mentioned in my previous reply, not a good approach.

I think that offsetting covered call (or equiv NP's) would be a dangerous way to approach this because in a successful two component regression position, one covered call has limited profit while the other large loss potential. Not a recipe for success. IOW, the profit on the side that woks...

I agree on the reflection. I think the objective is to take advantage of a reversal from exaggerated price.

It's a question of trading (option) volatility only if IV's are gyrating around. It's tough to suggest the "ideal" option position for this w/o knowing the magnitude of the daily ROC. If the A-B spread has risen to exaggerated levels (A has risen, B has fallen) and you expect a decent...

If there's any time premium remaining in your short 50 calls, you're unlikely to be assigned. Exercising the long 55 calls to buy the stock $3 above market is insane. Don't. It's a $3 haircut. What you do depends on your margin and your outlook for XYZ until expiry. If you have the...

It could start out as anything - naked put, vertical, spread, diagonal, etc. I'm more concerned about not losing than the winning which I believe to some extent, takes care of itself. My comfort zone is building positions as price allows. Here's another example. Suppose my comfort zone...