GOOG Oct strangle on the 18th, close the 19th.

GOOG is around 647. It's surprising how well it has held up with the S & P down heavily. If the overall market recovers today, GOOG might blast past 650.

Disclaimer: This is NOT a recommendation. :D

AZD
 
Quote from arizonadreamer:

Yesterday, I opened up an iron butterfly (B 630P S640P S640C B650C) for close to 9, thinking that GOOG would not move too much, or if it did, it would be backing and filling close to the short strikes. I was okay with the risk/reward of 1 vs. 9. Don't ask how many contracts. LOL

In extended hours, I thought the non-movement was too good to be true. Jackpot, I thought? No, I know better. LOL

However, this morning, with the underlying going over 658, going barely under 650, it seemed I better close this thing out - just over 8.

Of course, 5 minutes later, I could have closed it for the low to mid 6s!!! A profit is a profit but I'm definitely no prophet.

AZD

Spin, are you still there? Pizza is on me.
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:)

Don't know why I'm smilin'. My day is still up in the air. Good job.
 
Quote from scriabinop23:

It does exist at times. In particular with stocks such as goog, where often options are traded more than the outright stock (due to high stock price and low options price due to low vol, better allocation of cash).


But judging by the price action this past month, if I had to guess, we get a 640 close tommorow or a 620 close (second guess). 570 is the third guess, but that seems impossible considering the earnings were so good. [damn, looking back i should've bought butterflies...]
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In order for a stock to get pushed to a strike, due to options expiration, the underlying stock actually needs to be traded. Large players need to be hedging their options with the spot. The stock doesn't move simply because someone big owns the options. If that was true, that would mean the stock is a derivative of the options, and not the other way around.
 
Quote from verbotenlaandia:

In order for a stock to get pushed to a strike, due to options expiration, the underlying stock actually needs to be traded. Large players need to be hedging their options with the spot. The stock doesn't move simply because someone big owns the options. If that was true, that would mean the stock is a derivative of the options, and not the other way around.
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When someone trades options with a market maker, often the MM is hedging with stock as the options positions are initiated. And as the stock moves. Also gamma scalp positions put a huge pressure on movement (resulting in none).

Look at GOOG price action now.. It'll take the FOMC coming out with a midday 50bp cut to move that stock away from 550 due to the hedging activity.

If there weren't options being traded, GOOG might be at 570 or 530 right now.
 
Quote from scriabinop23:

When someone trades options with a market maker, often the MM is hedging with stock as the options positions are initiated. And as the stock moves. Also gamma scalp positions put a huge pressure on movement (resulting in none).

Look at GOOG price action now.. It'll take the FOMC coming out with a midday 50bp cut to move that stock away from 550 due to the hedging activity.

If there weren't options being traded, GOOG might be at 570 or 530 right now.
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hmmm... not sure if I agree with this statement ... so stocks with unusual high pre-report option's volume NEVER move the morning after ?
 
Quote from IV_Trader:

hmmm... not sure if I agree with this statement ... so stocks with unusual high pre-report option's volume NEVER move the morning after ?
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thats not what I'm saying.

Look at the options volumes on GOOG compared to almost any other stocks [much more]. Then compare the option volumes (at the money) to the underlying stock volume. Doing this simple math, you'll quickly realize that the options trades are moving this stock more than underlying stock buyers in a day like today.

GOOG pins like no other stock I've seen.

today:
ie at 640-660 call october strikes, 82k options
and put strikes 630-660, 122k options

and november options today: 20k options in that same strike range.

lets avg the delta exposure amongst all those strikes to a generous 30. (early in the day you have a lot more deltas than later of course due to fast decay)

224k options * 100 shares * .30 (delta multiplier) = 6.72 million shares out of total already 10.7 million.

Add in program trading from indexes in a high volume day like today, and I bet not more than 1 or 2 million outright shares traded today (versus options hedging stock share trades).

Thats pinning for you.
 
s23 , I understand . Pinning aside , how one knows the MM imbalance ? Assume for a second that its only one MM and he had ZERO inventory yesterday 4 pm ( retail bought and sold equally ). Is retail holding stock today from moving ?
 
Quote from scriabinop23:

When someone trades options with a market maker, often the MM is hedging with stock as the options positions are initiated. And as the stock moves. Also gamma scalp positions put a huge pressure on movement (resulting in none).
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Yes, agreed...I thought you were saying something else.
 
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