Earnings & Events-Related Option Plays

AZD,

It's a simple short term volatility play. No more, no less. If something causes IV to inflate, you get hammered and just have to take the loss. I think the odds of that are small but like everything, it's a bet.

Initially, it's a bit tough too get your arms around the nakedness of it all but IMO, it just isn't as risky as many other directional strategies.

Spin
 
Quote from spindr0:

AZD,

It's a simple short term volatility play. No more, no less. If something causes IV to inflate, you get hammered and just have to take the loss. I think the odds of that are small but like everything, it's a bet.

Initially, it's a bit tough too get your arms around the nakedness of it all but IMO, it just isn't as risky as many other directional strategies.

Spin
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Spin,

Yes, it's the extra short legs in the far month that seems tricky. How does one determine the precise ratio for these extra shorts?

AZD
 
How does one determine the precise ratio for these extra shorts?
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I have a direct line to Miss Cleo's jail cell. She predicts the future :)

Seriously, I input the variables into an analyzer calculator/program and then vary the legs until I get an acceptable balance of risk and reward. If that doesn't happen, it's off to the next stock and its quotes. It's a lot of grunt work if you're going to be selective.
 
Cisco earnings NOV 7th
After MSFT Killed numbers..

I have a feeling Cisco is going to blow the
top off estimates. Its really a little better than a feeling I work with the product.


I'm thinking of loading up on

Jan 08 27.5

Around 4.00


What do you think ?
 
Quote from FAST.AM:

Cisco earnings NOV 7th
After MSFT Killed numbers..

I have a feeling Cisco is going to blow the
top off estimates. Its really a little better than a feeling I work with the product.


I'm thinking of loading up on

Jan 08 27.5

Around 4.00


What do you think ?
More...

As someone mentioned on another thread recently, if you just want to buy calls, try to buy the most deltas for your money.

Also, if they report Nov 7 why not buy Nov options?

ETA: It's on the "Long term OTM vs. short term ITM Call options?" thread.

http://elitetrader.com/vb/showthread.php?s=&threadid=107522
 
Thanks - The delta on this is .84

the delta on the Nov .96

trading at 3.85


Theta on these are .01
about the Nov Calls
What about intrinsic value? More time decay than the Jan ?
I would do a Nov. I always go out to be safe.

What do u think?
 
Quote from FAST.AM:

Thanks - The delta on this is .84

the delta on the Nov .96

trading at 3.85


Theta on these are .01
about the Nov Calls
What about intrinsic value? More time decay than the Jan ?
I would do a Nov. I always go out to be safe.

What do u think?
More...

As an example:

(TOS shows .94 for the Nov delta, so I'll go with their numbers).

If you buy 10 contracts for Nov 27.450 calls at 3.85, that is $3850 for 1000 shares at .94 delta, or a total position delta equivalent to 940 shares of stock.

For $3850 you can buy 20 contracts of the Nov 30 calls which have a delta of .70. So that is a position delta equivalent to 1400 shares of stock. You get more bang for the buck (in both directions, you lose faster if it drops.)

I hope someone else chimes in to verify this. Don't go off and do anything based on what I say. :eek:
 
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