AAPL weekly strangle

[spindr0]

No offense to the OP but this is an object lesson for how hard it is to overcome the collapse of high IV options post EA. AAPL moved 18+ pts (15 above the long call) and the strangle lost
money. I just looked at Time & Sales and there was a window of about 30 seonds at the open for bailing at a small loss. TP was nearly gone at the open. Then it was all downhill from there.

Not that it applies to this position but you can support option positions in the pre/post market with long/short stock, especially when there's an AM conference call and a very profitable 4 PM move can reverse due to it. You can lock in the gain or go delta neutral to partially hedge.

This would be my cup of poison if the strangle's pre-market intrinsic value had been in the plus column.

 

[atticus]

Quote from SCI new york:

He wouldn't have had to go out to aug although could have. But buying a strangle right before the close on apple with IV at a high point isn't smart. The smarter play on the weekly would have been to get in thursday or friday last week before the IV started to pop, would have made a significant profit as opposed to possibly just a small profit/b.e./loss because of IV drop

Vol was flat last week into this (week). The shares rallied 15, you think? Hindsight is a helluva drug!

 

[SCI new york]

Quote from atticus:

Vol was flat last week into this (week). The shares rallied 15, you think? Hindsight is a helluva drug!

has nothing to do with hindsight, vol was low, options were priced cheaply and were pricing a small move, IV started jumping friday around noon and kept going, stock was obviously going to be bought going into earnings. Going long the day of earnings near the close when IV is highest is just not smart. That's not hindsight, that's proper knowledge.

 

[SCI new york]

Quote from atticus:

Bullshit. Stop using yahoo quotes. ATM premiums didn't rally, check the straddles. IV will rally absent decay, no shit. Who's going to drop premium into the report. He went long a binary and it would've worked had he gamma-traded AH.

"Get in Thursday or Friday of last week" is hindsight. Typical ET BS.

Who said anything about ATM options anyway? Point of a strangle is long OTM, maybe you should go to options 101.
maybe you don't know how to read a chart. why don't you pull up the weekly 375 and 400 calls and same for august. Calls moved ahead of the stock on friday, stock rallied, big increase in option volume and open interest. IV raised as well. Maybe you should upgrade your system.

 

[SCI new york]

Quote from atticus:

Bullshit. Stop using yahoo quotes. ATM premiums didn't rally, check the straddles. IV will rally absent decay, no shit. Who's going to drop premium into the report. He went long a binary and it would've worked had he gamma-traded AH.

"Get in Thursday or Friday of last week" is hindsight. Typical ET BS.

And you want to talk hindsight but you finish by saying it ''would have" worked had he gamma traded AH. That sounds like a lot of hindsight sh!t to me. He mentioned a very specific strategy, that strategy was wrong. A long strangle on apple earnings shouldn't be put on day of earnings right before the close. History has proven that obvious. Maybe you don't understand how it works.

 

[atticus]

These aren't IV-trades. You would need 3500bp to BE on implieds (with shares at (389.50). It's a binary trade and IV has little impact when it's trading 80 delta. Of course you get obliterated at neutrality, but the OP was betting on stat vol exceeding implieds. It was actually a good bet as the shares hit 405 AH. The shares were sitting at 400 for an eternity last night. Ample opportunity to lock the gains at 20-25 on the combo.

The moral to this story is to trade it small enough that you can cover it 100% in shares in AH-trading.

 

[ForexForex]

Quote from atticus:

Bullshit. Stop using yahoo quotes.

Nothing wrong with Yahoo Quotes. Below is a screen shot of an open position in IB, the same position I track with Yahoo Quotes. The difference for Market Value and P/L is only $1.00, and I attribute that to the 20 minute delay with Yahoo Quotes. Once the market closes it's usually within a penny. The screen shots were taken about 14 minutes ago.

Live trade with IB

Yahoo Quotes of the same position

 

[spindr0]

Quote from spindr0:

Not that it applies to this position but you can support option positions in the pre/post market with long/short stock, especially when there's an AM conference call and a very profitable 4 PM move can reverse due to it. You can lock in the gain or go delta neutral to partially hedge.

This would be my cup of poison if the strangle's pre-market intrinsic value had been in the plus column.

When I glanced AAPL last night before replying to the OP, I saw that the last trade was 394, up 18+. Since I wasn't following it (and didn't look carefully), I didn't realize that it had hit 405 in PM trading (as per the info provided by atticus).

So at 405, the strangle DID have a positive intrinisc value and utilizing post market shares to lock in the gain was applicable.

 

[spindr0]

Quote from ForexForex:

Nothing wrong with Yahoo Quotes. Below is a screen shot of an open position in IB, the same position I track with Yahoo Quotes. The difference for Market Value and P/L is only $1.00, and I attribute that to the 20 minute delay with Yahoo Quotes. Once the market closes it's usually within a penny. The screen shots were taken about 14 minutes ago.

Yahoo quotes and market orders is the secret to success!

:eek:

 

[SCI new york]

Quote from atticus:

These aren't IV-trades. You would need 3500bp to BE on implieds (with shares at (389.50). It's a binary trade and IV has little impact when it's trading 80 delta. Of course you get obliterated at neutrality, but the OP was betting on stat vol exceeding implieds. It was actually a good bet as the shares hit 405 AH. The shares were sitting at 400 for an eternity last night. Ample opportunity to lock the gains at 20-25 on the combo.

The moral to this story is to trade it small enough that you can cover it 100% in shares in AH-trading.

You are not the OP, so you don't know what he was or wasn't betting on, you're assuming that. Binary or not doesn't matter. IV on OTM calls, especially during earnings on apple is always going to impact the trade and should be taken into consideration. And it wasn't a good bet because AH trading means sh#t to options, you can't trade or adjust the option positions so that point is moot. Shooting for the stars trying to lock in the couple of points above 400 when it was there isn't a great strategy either. And none of those calls were trading 80 delta either when the trade was put in. They werent at 400 for an 'eternity' either.