Explain this price action?

[themickey]

Not wishing to say "told you so" after the fact, but going long at this point is a tad premature and trade is best done after a more solid signal rather than jumping in too early.

ROFLMAO..LONG? This suckerbill is headed down some more.

On the money.

 

[jimmyjazz]

I don't recall asking for advice on the trade itself. I'll let you know when I sell so you can stroke yourself and feel big time . . . unless i make a profit. Twat.

 

[volpri]

I don't recall asking for advice on the trade itself. I'll let you know when I sell so you can stroke yourself and feel big time . . . unless i make a profit. Twat.

ROFLMAO

 

[themickey]

 

[jimmyjazz]

FYI, the price of SOXL has now rebounded to above where it was when I purchased the calls. Midpoint is currently at less than half of what I paid. Ask is barely above that halfway point. Theta decay doesn't even come close to explaining the price decline. Hence, the thread.

 

[spindr0]

FYI, the price of SOXL has now rebounded to above where it was when I purchased the calls. Midpoint is currently at less than half of what I paid. Ask is barely above that halfway point. Theta decay doesn't even come close to explaining the price decline. Hence, the thread.

As I previously mentioned, look at the vols.
The answer is there somewhere.
Come out, come out, wherever you are!

 

[jimmyjazz]

Yeah, in the absence of dividend or interest rate influence, volatility must be the answer. I don't have the ability to see that information, or at least I don't know where to look.

It's no fun to take it in the shorts on the way down without even a reacharound on the way back up.

Is this pricing behavior perhaps amplified because the calls are way OTM?

 

[sle]

Since you’re an engineer, just do a simple perturbation-based explanation
Time: -15 cents
Spot: 45 cents
IVol: -150 cents
Which matches the prediction by Greeks:
10 days of decay times 9/365 = -20 cents
2.06 dollars in sport times 0.2 = .4
46-57 vols times .13 = -1.44

 

[jimmyjazz]

Like I said, I don't have the volatility data at my fingertips, but it's hard for me to imagine a significant volatility drop on a price drop. (I had to change brokers and I am not able to access the same level of data I used to. I'm working on that.)

 

[spindr0]

Yeah, in the absence of dividend or interest rate influence, volatility must be the answer. I don't have the ability to see that information, or at least I don't know where to look. Is this pricing behavior perhaps amplified because the calls are way OTM?

If anything, price behavior of far OTM calls will be muted since they are low delta. With no change in rate and dividend and knowing the amount of time that elapsed and underlying price change, the only thing left is volatility. Brokers provide that info. There are loads of option calculators available on the net as well.