Guru option profit question

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igcompany

I found this guru who claims to have 97% success rate at trading options.

I must say I do not know that much about options, I trade stocks mostly, but as far as I know when you are buying a put, you are expecting for the price of the stock to go below the strike price before the expiration date.

So accordingly to the screenshot attached, this guy bought August 151 puts on July 11 and sold them on July 16.

But if we check out the price of $DIA between July 11 and July 16 we'll see that it traded between 154.38 and 154.30.

So, how did this guy manage to get out of the trade with a profit if the puts never went lower than the strike price?

As I was saying, I know very little about options so you are welcome to correct me if I'm wrong.

Thank you!

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You are correct, looks bogus. At least according to my data (IB):

For the DIA Aug 151 P, I show a low of 1.30 on 7/11 and a high of 1.31 on 7/16. How he got an entry of 1.06 is a mystery.

Op prices can move a lot without the underlying moving much (with changes in IV just because of buying/selling pressure, like in a stock before/after earnings). But in an index like DIA you usually don't see those kinds of changes reflected by these supposed trades.
 
Ok, that's strange.

But how about the fact that he closed a position with a profit before that position even hit the strike price? Are you able to do that?
 
Yep. You can buy or sell any time before expiration. Of course you need a counterparty. At expiration you only get the amount in the money. Before then, there is a time value component.

But with "Euro-style" ops you can't exercise them before expiry.
 
Quote from igcompany:

Ok, that's strange.

But how about the fact that he closed a position with a profit before that position even hit the strike price? Are you able to do that?
More...

Yes you can. Imagine all options that are out of the money - they can trade all of the time, nowhere near the strike.

My info shows low of 1.245 on 7/11 and high of 1.355 on 7/16 so his trades are not possible as stated (incidentally, those options didn't trade in the 1.06 area until the 17th EOD... so maybe your guru has a time machine? That would qualify anybody as a guru.
 
I also checked the prices up on IB. On 7/16 it shows a high of 1.66. I cannot see the low for 7/11 since I am not subscribed to market data and I can only see the prices for the last week.
 
My data was for the IB "SMART" route, at 4hr intervals. Other exchanges will probably be different, but I looked at CBOE too and it was within a few cents of SMART. Also, some price data may show b/a quotes and not actual trades.

So no matter where you look, seems like the $106 is way low. Wonder if that "97%" trader needs to recalibrate his sim system? :p
 
Quote from igcompany:

I also checked the prices up on IB. On 7/16 it shows a high of 1.66. I cannot see the low for 7/11 since I am not subscribed to market data and I can only see the prices for the last week.
More...

For aug151P? I don't see 1.66 at all (IB SMART) on 7/16. Anybody else? In fact, I don't see that 1.66 even traded going back one month.
 
Quote from igcompany:

I found this guru who claims to have 97% success rate at trading options.

I must say I do not know that much about options, I trade stocks mostly, but as far as I know when you are buying a put, you are expecting for the price of the stock to go below the strike price before the expiration date.

So accordingly to the screenshot attached, this guy bought August 151 puts on July 11 and sold them on July 16.

But if we check out the price of $DIA between July 11 and July 16 we'll see that it traded between 154.38 and 154.30.

So, how did this guy manage to get out of the trade with a profit if the puts never went lower than the strike price?

As I was saying, I know very little about options so you are welcome to correct me if I'm wrong.

Thank you!

attachment.php
More...

His dates are off. He could have gotten that price on July 15th and sold it the next day. I'm showing a low near 1.07 on the 15th and a high near 1.31 the next day.
 
Quote from rroverx:

For aug151P? I don't see 1.66 at all (IB SMART) on 7/16. Anybody else? In fact, I don't see that 1.66 even traded going back one month.
More...

On June 24th it was over 7.00.
 
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