AAPL today.

Quote from TheGoonior:

This is arm-chair quarterbacking on my part, but aren't both of you giving up a lot of upside potential when you play the spread vs. the straight call in an earnings play?

For example, on the 560/600 vertical, for an additional risk of about $300 (downside buffer of about 20% on your long call), you had unlimited upside potential which turned that 100% in to a 300% gain.
In addition, you only needed half the move to occur to reach your 100% gain on the long call.
Now, normally I like spreads, but you were long in to earnings, which means you were bullish and expected the stock to pop (or so I assume). Apple has a recent history of beating earnings (typically they seem to set the guidance kind of low), so that's another factor to consider.
Both good trades, but possibly a bit too conservative given the setup in my opinion.
Just my $0.02.
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The small call spread carries a small vega-position, and is essentially a touch option on the outcome. You have to fight the headwind of vol dropping 1000+bp tomorrow.

I agree on the 560/600 call-spread. Not worth it to cap the upside for the $300 credit.
 
Well here's what happened.

I have a small account and after some risk-plotting, etc etc on TOS I decided to get into a condor 580/585/595/605 ...

I also wanted to profit from any downside swing so i also wanted another condor on the put side.

As I entered the upside call condor in IB, I wasn't getting my fill at all. So I thought maybe I'll just enter them as two verticals- one vertical for a debit and the other for a credit. After I entered the long vertical, IB tells me I can't enter into the credit spread because of margin issues. I was surprised and frankly annoyed as well. Because my account is still under 25K I don't want to risk getting into a pattern day trade.

So at that point I was a bit disappointed and entered the put condor for the downside protection as a single combo to see if that would get filled and it did for about a $1.56 debit- right at midpoint.

So that's the story with my silly vertical.

And you guys are right. I could have just bought the calls outright. But that would've cost me $1100 for one call.. with post earning's IV collapse, I couldn't take that chance so I decided to spread it off. The vertical on the other hand, only cost a $1.75.

But thanks for pointing it out.
 
Quote from babutime:

Well here's what happened.

I have a small account and after some risk-plotting, etc etc on TOS I decided to get into a condor 580/585/595/605 ...

I also wanted to profit from any downside swing so i also wanted another condor on the put side.

As I entered the upside call condor in IB, I wasn't getting my fill at all. So I thought maybe I'll just enter them as two verticals- one vertical for a debit and the other for a credit. After I entered the long vertical, IB tells me I can't enter into the credit spread because of margin issues. I was surprised and frankly annoyed as well. Because my account is still under 25K I don't want to risk getting into a pattern day trade.

So at that point I was a bit disappointed and entered the put condor for the downside protection as a single combo to see if that would get filled and it did for about a $1.56 debit- right at midpoint.

So that's the story with my silly vertical.

And you guys are right. I could have just bought the calls outright. But that would've cost me $1100 for one call.. with post earning's IV collapse, I couldn't take that chance so I decided to spread it off. The vertical on the other hand, only cost a $1.75.

But thanks for pointing it out.
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Your vert was the best trade posted on this site, regarding this report.
 
Quote from atticus:

You're still underwater at the current mark of $604... and one small detail.... I just checked T&S and that call had never traded (ever) at 158.55, which is your paper fill on this sim-trade.
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HAHAHAHA

Detective atticus strikes again. Nice work.
 
Quote from atticus:

Your vert was the best trade posted on this site, regarding this report.
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It was? The condor would've made money too had it been filled but oh well. Suddenly I feel much better about my trade... lol... :D

Quote from Clubber Lang:

HAHAHAHA

Detective atticus strikes again. Nice work.
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Lol!

Atticus Finch killed a mo(therfu)cking bird!.

He should have known because his platform- ThinkOrSwim makes it a joke to see daily data of specific option contracts since its inception... if he was gonna bullshit about his trade he should have at least not posted the screenshot...
 
Quote from youngtrader23:

@TheGoonior -- So you would have just called 1 lot at 600? I am thinking of doing something similar tomorrow--just calling at 650 for the May contract. Am I using the correct language?
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I'm not sure what strike I would have used. Long a 560 or long a 600 would each have given about a 100% return, but obviously the capital outlay was different...just depends on what size of move you expect, how much you have, and how much you want to risk.

At this point, I would almost certainly play things as a spread instead of the outright call:

1) A big move just happened and everyone is piling in. AAPL is currently moving higher, but a lot can happen between now and May expiration. Could you get another big move up? Sure, but you could also get a grind up or even a pullback, both of which will mangle your straight call. Earnings has already happened, so in my opinion, any surprise events at this point would probably be negative ones.
2) The front month call exposes you to a high time decay (theta). In addition, the big move has pumped up the volatility, so now you're paying a premium price for the options. A spread could offset a good amount of this risk while giving you decent upside.
For example, a May 650/665 spread drops your theta exposure by about 80% and reduces your capital risk by about 50%.
You can probably do some other cool stuff with flies, etc, but I'll let Atticus & others chime in on those because I don't trade them that often.
 
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