Amazing Short Straddle Opportunity right now

[TheGoonior2]

Is shorting the call, meaning buy a "sell" call??

The short straddle mentioned by the OP is selling a call and a put at the same strike at the same expiration. The concept behind it is to take advantage of a "perceived expensive" situation in premiums which is expected to correct (i.e: market volatility subsides, option premiums drop, and you can by back the straddle at a profit).

A common practice is to purchase "garbage" wings (long a put and call with out-of-the-money strikes...in other words, a long straddle) as a hedge. This has the effect of transforming the short straddle (unlimited risk) into a short iron condor (limited risk, but lower maximum profit). In this case, due to the low cost of KODK, it is not unreasonable to forgo the long put as you are capped at 0 to the downside.

Also, in many cases, you can't actually short naked calls (i.e: IRA), so you have to add the long call in order to be able to execute the trade.

 

[vanzandt]

Yes, should be interesting to watch for sure. Fidelity doesn't offer short data for some reason, and Yahoo only updates every 2 weeks as you stated. Where do you find accurate (preferably up to date) short data? I remember once getting the data straight from FINRA (short volume), but even those numbers are incomplete at best, as I recall. I'm pretty sure the 14 day lag is due to the regulatory issues (data need not be reported right away). All that said, do you have a source for more current short data?

It is regulatory. It used to be every 30 days, then they changed it to 15.

I think these guys are pretty accurate.
http://shortsqueeze.com/?symbol=kodk&submit=Short+Quote™

 

[vanzandt]

Is shorting the call, meaning buy a "sell" call??

Goony gave a good explanation, but basically by shorting the call, you are the option writer. You are selling a call option. The same for a put. If you short a put, you are writing the option.
In both cases you get whatever the bid is. Or something in between if its a wide spread.

 

[Option_Attack]

It may help you keep things straight at first if you use the terms "Sell to Open" (short), or "Sell to Close" (you were long), etc.

Is shorting the call, meaning buy a "sell" call??

 

[S2007S]

buy yourself a few good options books ... you are a danger to yourself ...

I trade only simple puts and calls and risk literally 0.0005% or my portfolio. So actually no risk what so ever when I trade options.

 

[donnap]

Not saying it's necessarily a bad trade, but you'd be wise to add some garbage wings...at least on the call side as you're capped nicely on the downside due to the hefty premiums.

I'm not seeing any strikes higher than 7.5. Maybe tomorrow.

 

[TheGoonior2]

I'm not seeing any strikes higher than 7.5. Maybe tomorrow.

What's odd is that TOS is showing 10, 12.5, and 15 strikes in all months with actual volume in some. IB is showing nothing beyond 7.5. I don't see any other classes listed in the option page for IB. Any idea where the TOS stuff is coming from?

 

[RRY16]

I wish I knew how to trade options like that. I only know about simple puts and calls. Because that trade sounds like an absolute winner.

You’re a numbnut Corky!

 

[qwerty11]

What's odd is that TOS is showing 10, 12.5, and 15 strikes in all months with actual volume in some. IB is showing nothing beyond 7.5. I don't see any other classes listed in the option page for IB. Any idea where the TOS stuff is coming from?

Only explanation is that you look at wrong symbol...

 

[TheGoonior2]

Only explanation is that you look at wrong symbol...

Is there another trading symbol for Eastman Kodak?