Divergences

[4re]

Quote from romik:

Can somebody comment on the following regarding option pricing on IPG. When the underlying price was around $9.80 Oct 10 strike calls have been priced @ $0.25. Right now stock is trading above $10 and same strike calls have gone down to $0.15 Bid.

When the volume starts drying up the implied volitility goes down with it. Plus it is so close to option expiring that it is losing value there as well. If price really starts moving the IV will start picking back up.

 

[romik]

So if price is near $11 near OE date, there is a chance of 10 calls's price still staying unchanged?

 

[billp]

Quote from billp:

Romik,

I only have the most basic understanding of options. To really know options, one has to study the greeks. Greeks consist of terms such as vega, theta, delta etc. There is a lot of things to study at least I think so. That's why I ran to stocks.

An option price consist of Intrinsic value + premium
This premium is affected by time (ie days to option expiration), volatility etc
Edit: Intrinsic value = the difference between the option strike price and the current stock price

When an option is about to expire in your below query, the option price will be around $1 (give and take)

Hope this helps.

 

[romik]

Quote from billp:

Well, if those 10 Oct calls are going to be valued at ~$1, then it would be great.

 

[billp]

Romik,

There's a lot of things to consider for options. My knowledge is pathetic. If you are really interested, you need to read books, options topics in ET + a lot of screen time.

Also, you need to sell the option before it expires to collect the $. Please note that you will certainly be getting less than $1 due to spread etc. Can't really help you much on options 'coz my knowledge is real pathetic.

Quote from romik:

Well, if those 10 Oct calls are going to be valued at ~$1, then it would be great.

 

[romik]

Quote from romik:

LONG CL Z6

Current at the time of call: $59.76 100% position
PT1: $63.80
PT2: depends
Average down: N/A
Stop: $57.00

BLDs on a daily chart in MACD/HIST/RSI/CCI. Hard stop will be used below recent reaction low of $57.70, stop $57.00. Weekly and monthly charts are bearish though.

I am revising this due to wrong chart used initially, that mistake in charts has worsen the odds.

Current at the time of call: $61.95 100% position
PT1: $63.80
PT2: depends
Average down: N/A
Stop: $58.00

BLDs on a daily chart in MACD/HIST/RSI/CCI. Hard stop will be used below recent reaction low of $58.50, stop $58.00. Weekly and monthly charts are bearish though.

 

[romik]

QUOTE]Quote from romik:

T (NYSE) AT&T, Inc

Current: $27.89
PT1: $26.50
PT2: $25.00
PT3: $23.00 not certain on this one, see below
Stop: $29.00
B Class BRD in MACD HIST/BRD in CCI on a daily chart attached. If price fails to go through 28.50 on high volume, then a double top will be in the making and PT3 will be more possible in that case.


http://finance.yahoo.com/q?s=T [/QUOTE]

Quote from romik:

PT1 hit

Quote from romik:

Though PT1's been hit and I should have exited @ entry if PT2 would not materialize...I am staying in this position, actually I am going to average this position @ $28.42 (average price) as it looks like it is developping a very cute BRD on a weekly chart on all 3 oscillators. Here is the chart

Quote from romik:

UPDATE on AT&T

Looking at daily chart another really great opportunity is currently presenting itself to short AT&T based on yet another BRD in both MACD and RSI. This stock's been a bit of a hold so far, but nevertheless the signs are still favouring the short side. So if any of you guys are short and thinking of abandoning ship, I would have continued holding the short as the daily is ripe for a decline in the price very soon. BBs are pretty tight (~$30-$31.5), recent silver tight BB range has been broken only yesterday, so I am quite excited about AT&T at last. Here is the chart.

+4.98% on 50% position
current unrealised -18.22%
adjusted total running PnL: -15.72%

Well, why don't I close it now and lock in current loss? The answer is a possible 3BRD in MACD and RSI on a daily chart attached. Of course what makes it a possible WRONG (not saying bad here) decision is that weekly and monthly charts are both bullish...not a good sign for this short position. Whatever happens, I will cut the loss above resistance $35.00, so position will be covered @ $35.20 or ~-21.36% on this position (adjusted).

 

[romik]

First 1/4 results on $400k initial investment: +6.82%

 

[romik]

Quote from romik:

SHORT - IPG (NYSE) Interpublic Grp of Cos

Hedge: Buy 75 Oct $10.00 Calls @ 0.25

Current: $9.83
Average down: ~$10.17
PT1: $9.10
PT2: $8.00
PT3: N/A
Stop: ~$10.30
BRD in HIST on a daily chart attached, but daily chart is in an uptrend with a possible double bottom in the mid $7 range. Possible reward outweighs risk here. I would say that this could be a risky trade when looking on the daily chart.

http://finance.yahoo.com/q?s=IPG

Position covered $10.32

-3.2% adjusted after averaging @ $10.17

Oct 10 calls remain open.

 

[romik]

EBAY's weekly chart looking bullish IMHO, if I wasn't maxed out on my virtual capital, I would have added a long position Ebay based on a weekly BLD in MACD. I would say it could be a steady climb from now, making a stop below the reaction low of $22.83 entering with 50% of max position size as there is a 3BRD on a daily chart, so looking set for a pullback and THEN adding another 50% near 20ma and/or lower BB level.

Weekly chart here looking bullish IMHO:

And a daily chart showing a 3BRD in HIST, pullback expected:

I would also buy a mixture of 2 puts contracts for hedging purposes, perhaps Nov 06 27.50/25.00 or just the 27.50 strike.