Another Cramer options play

A

AAAintheBeltway

Ok guys, time to give Jim Cramer another bashing. He's out on his site with a suggstion to buy the JNPR April 30 calls, now 2.25 ask, and sell the Feb's tomorrow off the CSCO report tonight, then sell the Marches as well whne the Feb's go out. His reasoning is JNPR doesn't report again until the April cycle, so the stock likely will be rangebound until then but should get a pop off the CSCO report.

Makes sense to me, but with the stcok at 28 and change, the Aprils do look a little pricey at 56.8 IV. What do the experts think?
 
Quote from AAAintheBeltway:

Ok guys, time to give Jim Cramer another bashing. He's out on his site with a suggestion to buy the JNPR April 30 calls, now 2.25 ask, and sell the Feb's tomorrow off the CSCO report tonight, then sell the Marches as well whne the Feb's go out. His reasoning is JNPR doesn't report again until the April cycle, so the stock likely will be rangebound until then but should get a pop off the CSCO report.

Makes sense to me, but with the stock at 28 and change, the Aprils do look a little pricey at 56.8 IV. What do the experts think?
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I don't like that play. And I'm not sure I know what his goal is here. I found a much better trade if he is expecting a gap tonight. Sell the feb 22.5 puts for a 62 vol and buy the july 22.5 puts for a 58 vol after the stock gaps up tomorrow. That would be a nice calendar spread. However having said that I don't like the vol at these levels. JNPR is right off it's 52 week highs which tells me that vol is going to keep coming in. Vol could easily come in another 10 ticks.

If he really wants to buy the april 30 calls, he should buy the july 30's instead and sell the febs and march. But I just don't like that trade. Again, in my opinion, the better trade is sell the feb 22.5 puts today, stock gaps up tomorrow and buy the july 22.5 puts tomorrow. You should be able to get maybe even a 55 or 56 vol tomorrow on them plus lock in some deltas.

AAA, has he made any good option calls yet that you know of, that last one wasn't too great either.
 
Mav,

I'm not sure what his record is. He really doesn't make too many suggestions. I think typically he ignores the greeks and makes some kind of gut call relating to movement and timing of movement in the underlying. Certainly that was the case with the COF trade.

I think his reasoning on this JNPR trade is more of an attempt to get the Aprils cheap by selling the Feb's and Mar's rather than trying to play apossible gap up in JNPR. If that was the objective, I think using stock would be a better choice.

I'm posting his suggestions because they strike me as interesting situations in the underlyings, and I also find it very educational to see how you and the other options experts analyze them.
 
Quote from AAAintheBeltway:

Mav,

I'm not sure what his record is. He really doesn't make too many suggestions. I think typically he ignores the greeks and makes some kind of gut call relating to movement and timing of movement in the underlying. Certainly that was the case with the COF trade.

I think his reasoning on this JNPR trade is more of an attempt to get the Aprils cheap by selling the Feb's and Mar's rather than trying to play possible gap up in JNPR. If that was the objective, I think using stock would be a better choice.

I'm posting his suggestions because they strike me as interesting situations in the underlyings, and I also find it very educational to see how you and the other options experts analyze them.
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Yeah I think your right. The one thing about Cramer is that guy is connected. So he hears things around the office. He probably knows CSCO is going to have a blowout qtr and the nasdaq is going to pop tomorrow on it. He also knows that JNPR might move in unison with CSCO's numbers so that is why he is taking the bet. I would use his inside information more then his option recommendations. I think the guy is pretty good at getting the pulse of the market. I guess we should expect a very good number from CSCO.
 
Quote from Maverick74:

Well, so much for JNPR gapping up on CSCO. The stock is down .66 in after hours. Good job Cramer. LOL.
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CSCO down a buck and change after hours :eek:
 
Would Cramer play the public?

Could he have known the opposite and been SELLING the 30s? and just lining up buyers by making the suggestion publicly. It would certainly keep the powers from looking into him (on the surface) if he appeared to making the wrong calls, yet secretly profiting from them.

Am I giving him too much credit? I think he is a smart guy, but I see a lot of bad calls from him. It makes me wonder how a guy who can be wrong that often and doesn't have a great understanding of options can make money trading - if he even does.
 
Quote from ktm:

Would Cramer play the public?

Could he have known the opposite and been SELLING the 30s? and just lining up buyers by making the suggestion publicly. It would certainly keep the powers from looking into him (on the surface) if he appeared to making the wrong calls, yet secretly profiting from them.

Am I giving him too much credit? I think he is a smart guy, but I see a lot of bad calls from him. It makes me wonder how a guy who can be wrong that often and doesn't have a great understanding of options can make money trading - if he even does.
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I don't believe he's playing the public...that kind of stuff has a way of leaking out and he's too smart for that.

You may be giving him too much credit in another way in that I do not believe he is smarter (or even better informed) than the market (no one is). Rather he makes his money by being a bull most of the time and cautious (but not short) the rest of the time. In a secular bull market you would have to screw up badly not to make decent money with this approach over the long run.

Having said that, he is entertaining and K&C is my favorite business news show.
 
Best advice on Cramer

Tune out, completely ignore

He doesn't even value as a contrary indicator, because even that is not perfect.

He's just a blowhard of no censequence except noise
 
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