Advice BIDU option play

N

nanirina

I'm kind of a newbie to options, and with Bidu's ER 2 days before option expiration, I think there might be some good profit to be had with playing options.

As I see that Bidu has a high premium on options due to high IV, I shorted 1 contract of both a call and a put option at the $240 strike price on different days (1 day apart).

I was aiming to earn on the premium. Time decays rapidly during the next week but I am not sure if IV will increase a lot before ER since Bidu already has such a high IV.

I am currently up a lot on the short call leg and down some on the short put leg. I'm up on the combo.

I expect vol collapse after the ER but am afraid that increase in IV prior to ER will eat away any gains in time decay, and huge movement in BIDU could eat away gains post ER.

So experts, what do you guys suggest? Is it better for me to cover now with a profit, or cover on Monday, or cover after ER?

TIA.
 
Quote from nanirina:

I'm kind of a newbie to options, and with Bidu's ER 2 days before option expiration, I think there might be some good profit to be had with playing options.

As I see that Bidu has a high premium on options due to high IV, I shorted 1 contract of both a call and a put option at the $240 strike price on different days (1 day apart).

I was aiming to earn on the premium. Time decays rapidly during the next week but I am not sure if IV will increase a lot before ER since Bidu already has such a high IV.

I am currently up a lot on the short call leg and down some on the short put leg. I'm up on the combo.

I expect vol collapse after the ER but am afraid that increase in IV prior to ER will eat away any gains in time decay, and huge movement in BIDU could eat away gains post ER.

So experts, what do you guys suggest? Is it better for me to cover now with a profit, or cover on Monday, or cover after ER?

TIA.
More...

i suggest you cover now.. IV will stay up to offset decay. the real falloff occurs the minute earnings are out.

If you want to earn $$$ on time decay and IV drop, sell strangles. And if you want to earn $$$ on time decay solely, pick a stock that doesn't have earnings between now and exp, ie goog.. Here's a trade for decay: Sell 520 or 530 calls Feb against long 520 or 530 calls Mar.
(goog)
 
Quote from scriabinop23:

i suggest you cover now.. IV will stay up to offset decay. the real falloff occurs the minute earnings are out.

If you want to earn $$$ on time decay and IV drop, sell strangles. And if you want to earn $$$ on time decay solely, pick a stock that doesn't have earnings between now and exp, ie goog.. Here's a trade for decay: Sell 520 or 530 calls Feb against long 520 or 530 calls Mar.
(goog)
More...
Thanks Scriabin... i covered like you suggested... will look to short some strangles and buy some calendar spreads as u suggested..

BTW... your nick is after the composer scriabin right? I like him too:)
 
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