Good call.
GOOG - Earnings this Thursday - Buy OTM weekly calls on Thursday
- Thread starter FXforex
- Start date
As I posted yesterday options are meant to be sold & not to be sold, which necessarily doesn't imply buying them. But for GOOG yesterday when I looked up IV's across the next six months they were way too low. Meaning there was no edge selling premium for GOOG yesterday. Now if they are not worth selling them - are they priced that low that its worth buying them
That's where the tricky analysis comes in
Is it cheap for a reason or has the options markets has completely oversold the IV.
Second thing I analyzed was how much IV's will drop after earnings release. I calculated Dec IV's will drop by 2.3% after ER.
So my IV drop risk was very limited with this strangle.
Even though greeks tell you what type of risk your position has , I am always more inclined towards permanent loss of capital. After analyzing my IV drop and theta bleed , I figured, chances of BE on this structure very strong as GOOG on average GOOG moves 6% and for this trade after considering theta bleed and IV loss, I needed GOOG to move only 3.94%- that's what added a lot of margin of safety in this structure.
I bought Dec 860/920 strangle for 36.5 yesterday and closed them this morning for 72.20 ( 2 lots only). Even though I am kicking my self for closing it too early - But again my risk management dictates to preserve the capital first and then grow it.
Happy this trade worked out pretty good. BTW, I still believe IV's are ridiculously low for GOOG now.
There are several other names for which IV are at ridiculous levels as they head into earnings for next several weeks.
That's where the tricky analysis comes in
Is it cheap for a reason or has the options markets has completely oversold the IV.
Second thing I analyzed was how much IV's will drop after earnings release. I calculated Dec IV's will drop by 2.3% after ER.
So my IV drop risk was very limited with this strangle.
Even though greeks tell you what type of risk your position has , I am always more inclined towards permanent loss of capital. After analyzing my IV drop and theta bleed , I figured, chances of BE on this structure very strong as GOOG on average GOOG moves 6% and for this trade after considering theta bleed and IV loss, I needed GOOG to move only 3.94%- that's what added a lot of margin of safety in this structure.
I bought Dec 860/920 strangle for 36.5 yesterday and closed them this morning for 72.20 ( 2 lots only). Even though I am kicking my self for closing it too early - But again my risk management dictates to preserve the capital first and then grow it.
Happy this trade worked out pretty good. BTW, I still believe IV's are ridiculously low for GOOG now.
There are several other names for which IV are at ridiculous levels as they head into earnings for next several weeks.
I came here to congratulate you on your 7 grand only to see you sold way too early, why would you not hold til exp?
Don't be a dick. The dude called the trade ahead of time and posted both fills. You're Monday morning quarterbacking it. Hindsight analysis is cheap.
It's funny to see you stating I am doing all this analysis in hindsight ,
If you look up my write up - my rationale was IV too low, less IV drop expected and by the way IV for Dec Options has came out by 0.3 ts not even 2.3 points which I expected. Believe it or not I still think IV in Dec and Jan is still way oversold
Not trying to bash up on my trade - all I am saying is premium sale was not worth it
If you look up my write up - my rationale was IV too low, less IV drop expected and by the way IV for Dec Options has came out by 0.3 ts not even 2.3 points which I expected. Believe it or not I still think IV in Dec and Jan is still way oversold
Not trying to bash up on my trade - all I am saying is premium sale was not worth it
(a) OP did a great job. He had the brass to buy far OTM directional with high loss potential and had the will power to stay in the trade until now.
(b) I would challenge OPs assertion that it's better to ride an earning surprise move as oposed to a fade the initial jump. It would be interesting to do some intraday data analysis to answer this question.
(c) I am a model monkey, so I barely doubled the premium paid once I covered the delta. My analysis was posted earlier, I still stand by it
(d) No, GOOG vol is not cheap now, if anything I think vol's a sell at this point. I can elaborate if people care.
(e) Overall, i am negatively impressed at how much post-trade posturing there was, as opposed to serious analysis. This is not the fucking congress, people.
(f) I love the pig photo
(b) I would challenge OPs assertion that it's better to ride an earning surprise move as oposed to a fade the initial jump. It would be interesting to do some intraday data analysis to answer this question.
(c) I am a model monkey, so I barely doubled the premium paid once I covered the delta. My analysis was posted earlier, I still stand by it
(d) No, GOOG vol is not cheap now, if anything I think vol's a sell at this point. I can elaborate if people care.
(e) Overall, i am negatively impressed at how much post-trade posturing there was, as opposed to serious analysis. This is not the fucking congress, people.
(f) I love the pig photo
Quote from sle:
(a) OP did a great job. He had the brass to buy far OTM directional with high loss potential and had the will power to stay in the trade until now.
(b) I would challenge OPs assertion that it's better to ride an earning surprise move as oposed to a fade the initial jump. It would be interesting to do some intraday data analysis to answer this question.
(c) I am a model monkey, so I barely doubled the premium paid once I covered the delta. My analysis was posted earlier, I still stand by it
(d) No, GOOG vol is not cheap now, if anything I think vol's a sell at this point. I can elaborate if people care.
(e) Overall, i am negatively impressed at how much post-trade posturing there was, as opposed to serious analysis. This is not the fucking congress, people.
(f) I love the pig photo
Sle. This is ET. A place where if you get the trade wrong, the bashers come out and rub it in. But if you get the trade right, the bashers come out and rip you apart. Joshua says, the optimal strategy is not to make the call. (see classic movies for Joshua reference)
first off, im not being a dick. I know very very few people that buy options that expire in 1-2 days and not hold it til expiration.
secondly, this isnt hindsight analysis, there was never forward looking analysis. OP bought a lottery ticket, made out nicely 20-1 and all of you are coming on here saying "nice trade great analysis OP". I'd be a lot more happy if he came on here and was like look I got 300 bucks to throw away and I want to have some fun, and we all sat with pop corn watching, enjoying. Instead people come on here and are saying great analysis OP, wonderful trade.
Are you kidding me?