Don't know a lot about ITMN now. But 2010 was a crazy name for them. I was running the biotech prop book at the time. This name was a rollercoaster to the end. The kind of name where very little vol could make millions over and over again. It was just a series of "tail events." The unlikely event happend 3 times (out of 3).
Earnings: IC vs Short Strangle
- Thread starter dbh21
- Start date
Don't know a lot about ITMN now. But 2010 was a crazy name for them. I was running the biotech prop book at the time. This name was a rollercoaster to the end. The kind of name where very little vol could make millions over and over again. It was just a series of "tail events." The unlikely event happend 3 times (out of 3).
A double diagonal is essentially an IC whose long legs are in a later month, usually the next. So if you can buy them cheap enough, the hard IV crush hits the near month much more. That gurantees nothing since you have to have a decent guesstimate of where the post news IV lands.
If the 2nd month is very inflated and you expect a large move in either direction AND an IV crash, a reverse double diagonal can have possibilities. Can be a diagonalized double straddle as well. These tend to work much better when closer to expiry because although you're paying through the nose for the short term long legs (high IV), you're not paying as much in terms of time.
Quite honestly, these take a bit of work to find and for some reason, I don't see anywhere near as many as before the GFC collapse.
Without an understanding of what's going on with the drug, I wouldn't touch this with a 10 foot pole. A lot of money can be made or lost being either long or short vol.
And at $15/share it's not like you are getting "call option" value.
And at $15/share it's not like you are getting "call option" value.
This is the trade I would make. Buy VVUS Mar 2012 16.00 calls @ $1.11 or whatever the price is on Tuesday, Feb 21. VVUS price target $20.00+, easy 4x gain on the options.
Options 101 = Keep things simple
Options 101 = Keep things simple
Quote from ForexForex:
This is the trade I would make. Buy VVUS Mar 2012 16.00 calls @ $1.11 or whatever the price is on Tuesday, Feb 21. VVUS price target $20.00+, easy 4x gain on the options.
Options 101 = Keep things simple
+1
Quote from dbh21:
I feel like such a Premium-whore - I was hoping to capitalize on the juicy premium... but... maybe I will just sit back and watch this time
In my opinion the best way to capitalize on the juicy premiums is with Iron Condors. Short Strangles are too risky.
Quote from ForexForex:
This is the trade I would make. Buy VVUS Mar 2012 16.00 calls @ $1.11 or whatever the price is on Tuesday, Feb 21. VVUS price target $20.00+, easy 4x gain on the options.
Options 101 = Keep things simple
Why do you say that the stock can go to 20+
