Earnings: IC vs Short Strangle

Quote from babutime:

oh gawd, here we go again....
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Just adding to your post, since it was incomplete.

Your post
I was gonna say maybe choose a direction and go far OTM but I guess that is still extreely risky...
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My post
But very rewarding :)
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Together
I was gonna say maybe choose a direction and go far OTM but I guess that is still extreely risky... But very rewarding :)
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Quote from newwurldmn:

What is your view on PCLN and what is the maket pricing?
Second order greeks are relevant but not necessary to model because it's a gap move and you can just remodel the option.
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The market is pricing a $50 move. And it has always jumped higher on earnings. Fundamentally though they have so many customers going to Europe and the European tourism env. woith higher hotel costs is prolly gonna show up in their guidance which for the first time might cause the stock to drop. Not to mention the street this time has much higher expectations.

So how would I remodel the option with that outlook?
 
Quote from babutime:
The market is pricing a $50 move. And it has always jumped higher on earnings. Fundamentally though they have so many customers going to Europe and the European tourism env. woith higher hotel costs is prolly gonna show up in their guidance which for the first time might cause the stock to drop. Not to mention the street this time has much higher expectations.
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Quote from babutime:
Overall I do expect it to rise
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Take a look at:
  • PCLN @ $590.00
  • Buy Mar16 2012 615.00 Calls @ $16.50
  • Sell Mar16 2012 650.00 Calls @ $6.30
  • Debt about $10.00

Based on your observations and expectations in your previous posts that position will be about a 3x return if PCLN reaches $590.00 + $50.00+ = $640.00+.
 
Quote from babutime:

The market is pricing a $50 move. And it has always jumped higher on earnings. Fundamentally though they have so many customers going to Europe and the European tourism env. woith higher hotel costs is prolly gonna show up in their guidance which for the first time might cause the stock to drop. Not to mention the street this time has much higher expectations.

So how would I remodel the option with that outlook?
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EDIT: I was reading the wrong maturity.
I would buy the march monthly call. $2 of premium for 2 weeks extra of maturity. Don't do a callspread, you won't get the 1 day satisfaction if you are really right.

But if you think it will rally and the market is pricing the vol correctly, why not just buy some stock such that you are okay with a 10% loss.
 
Quote from ForexForex:

Take a look at:
  • PCLN @ $590.00
  • Buy Mar16 2012 615.00 Calls @ $16.50
  • Sell Mar16 2012 650.00 Calls @ $6.30
  • Debt about $10.00

Based on your observations and expectations in your previous posts that position will be about a 3x return if PCLN reaches $590.00 + $50.00+ = $640.00+.
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You do realize that FF has PCLN "marked for death". I would lean heavily short now that FF has recommended a bull spread. PCLN has rallied between reports and I would bet on a bear reaction following the report.
 
Quote from atticus:
You do realize that FF has PCLN "marked for death". I would lean heavily short now that FF has recommended a bull spread. PCLN has rallied between reports and I would bet on a bear reaction following the report.
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Quote from ForexForex:
Based on your observations and expectations in your previous posts that position will be about a 3x return if PCLN reaches $590.00 + $50.00+ = $640.00+.
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Based on your "your observations and expectations". As in the ET member I was replying to, whom in this case is babutime (ex: Nine_Ender).

:)
 
Quote from atticus:

You do realize that FF has PCLN "marked for death". I would lean heavily short now that FF has recommended a bull spread. PCLN has rallied between reports and I would bet on a bear reaction following the report.
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LOL!!! "marked for death"

I think I'll stick to the fundamentals and remain bearish on this one. It's European outlook is likely to disappoint even if it beats earnings (The earning's guidance it provided last quarter is now being expected to be higher- so the street has some unusually high expectations)

Not to mention it's P/E ratio is quite high. I'll risk a small amount and buy some deep puts. Either way, it's got a strong propensity to rally in either direction after earnings so I'll prolly be able to capture some profits that way.
 
Quote from ForexForex:

Based on your "your observations and expectations". As in the ET member I was replying to, whom in this case is babutime (ex: Nine_Ender).

:)
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I don't know what you have against this Nine_Ender but I can assure you I am no "Nine_Ender"

You should meet up with him and hug it out- maybe a couple smooches and some strenuous physical activity between him and you might "straighten things" out for you two quarrelling lovers?

I was against prop-8 in the states. The two of you could be a shining example of how to overcome the odd-"balls"....

So please, for the last time, I'm not Nine_Ender
 
Quote from babutime:

LOL!!! "marked for death"

I think I'll stick to the fundamentals and remain bearish on this one. It's European outlook is likely to disappoint even if it beats earnings (The earning's guidance it provided last quarter is now being expected to be higher- so the street has some unusually high expectations)

Not to mention it's P/E ratio is quite high. I'll risk a small amount and buy some deep puts. Either way, it's got a strong propensity to rally in either direction after earnings so I'll prolly be able to capture some profits that way.
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You were bullish 3 hours ago. Atticus's comment make you change your mind?
 
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