GOOG up on earnings beat
GOOG Earnings this Thursday - 570/580/590 Butterfly only $1.20
- Thread starter diaoptions
- Start date
all very good points i appreciate your input.. obviously they beat and my otm call ratio calender would have been completely beat up.. but the ratio was more or less an experiment.. i didn't put the trade on but i have it sitting quoted in my IB account so i can see what would have happen when the vol implosion destroyed even the back week/month options.. i've always wanted to exploit the earnings trades that would enable me to make money on a non event via a butterfly and a tail event with some ratio back spreads.. i just haven't experimented enough with the change in assumptions to really know my risk.. need to get intimate with the weaponary..
I love looking at these strategies. Some have some serious potential. I mean the inital post with a cost of $110 and max profit of $1000 is a pretty nice risk reward ratio. I did the first post in a paper account just to see how it turned out
Quote from diaoptions:
OK .... This is my final butterfly position.
580/595/610 Butterfly $1.70
- GOOG @ 595.82
- Buy 1 GOOG Jul 2012 580.00 call @ $24.90 http://finance.yahoo.com/q?s=GOOG120721C00580000
- Sell 2 GOOG Jul 2012 595.00 calls @ $16.20 x 2 = $32.40 http://finance.yahoo.com/q?s=GOOG120721C00595000
- Buy 1 GOOG Jul 2012 610.00 call @ $9.20 http://finance.yahoo.com/q?s=GOOG120721C00610000
- Total Debit $1.70.
- Maximum loss $170.00, maximum gain $1330.00 if GOOG closes at $595 on Friday.
so just out of curiosity.. do you just let your butterfly's expire if you can't sell them for a profit?
Not quite the earnings move I had wanted
.You can't have it both ways. You are either long earnings vol or you are short it. If you want to be long earnings vol then just be long straddles or convex options. If you want to be short it then butterflys or calendars make sense (to hedge tail risk).
you know i traded a paper account years ago.. and it did nothing but give me false confidence.. one thing i do is model trades changing all the asumptions.. vol delta etc. if it looks to me like theres a good risk to reward .. i post it up in my account and i might not even trade it .. i might just look to see what its worth after the announcment.. this is basically as close as i've gotton to paper trading.. but generally i don't like it.. you'll never really learn to develop intuition unless your an active participate in the market.. PERIOD. people might disagree but thats my view... unless your getting use to a trading platform there are plenty of low risk to high reward stratigies that you can trade with that will be so much better for you.. at least i think.. using alot of margin, trading naked.. all recieps for disaster.. trading small and bleeding slowly to make good gains is the hardest thing for a trader to endure but usually the best strategy!
Quote from newwurldmn:
Not quite the earnings move I had wanted
You can't have it both ways. You are either long earnings vol or you are short it. If you want to be long earnings vol then just be long straddles or convex options. If you want to be short it then butterflys or calendars make sense (to hedge tail risk).
true! days not over yet that wasn't much of a pop at all! and its already dragged back down to 608 in after hours.. i wouldn't count your chickens just yet haha.. besides i put 45 bucks into the trade.. how could i possibly be upset.. i've only gotta have that work out half the time and i'd be rich.
I have a regular account with optionshouse that I trade, I just put trades like this that I am curious about and don't want to forget into the paper account with them so I can see how they would have turned out roughly.