GOOG - Earnings this Thursday - Buy OTM weekly calls on Thursday
- Thread starter FXforex
- Start date
Bearish on GOOG for this report.
Buying calls into earnings seems not to work because the ATM Straddles
going into earnings are almost always over priced compared to actual
price movement after earings going into earnings.
I think IBM's earning today is an exception, but buy calls would not have worked.
There are some back tested statistics from a Tasty Trade "Market Measures"
session showing that ATM straddles going into earnings have been mostly
over price going back a few years.
going into earnings are almost always over priced compared to actual
price movement after earings going into earnings.
I think IBM's earning today is an exception, but buy calls would not have worked.
There are some back tested statistics from a Tasty Trade "Market Measures"
session showing that ATM straddles going into earnings have been mostly
over price going back a few years.
Write them then
If you look at Implied vol across different tenors, vol is priced in the cheapest for GOOG heading into earnings tonight. ATM straddle is pricing 3.6% move as opposed to 5.7% average move , this stock has experienced over the last 14 qtrs.
Now the question to ask is - Is the vol priced low for a reason or its again a mis pricing . Average of downside move -5.5% and avg for upside moves is 7.15%
As they say in the world of options trading- option are meant to be sold and not to sell.. This time it definitely reflects that premium sale is more risky as GOOG reports earnings tonight
Now the question to ask is - Is the vol priced low for a reason or its again a mis pricing . Average of downside move -5.5% and avg for upside moves is 7.15%
As they say in the world of options trading- option are meant to be sold and not to sell.. This time it definitely reflects that premium sale is more risky as GOOG reports earnings tonight
mm move is predicting 31 pts...hate to say it but a 84% probability of losing + commission costs...why make these really stupid (no offense meant) calls?
As already mentioned buying calls just before earnings is one of the most consistent losing strats there are. and I do agree with the above comment I would not be a seller into this either.
As already mentioned buying calls just before earnings is one of the most consistent losing strats there are. and I do agree with the above comment I would not be a seller into this either.