How long $3000 will last option trading

Scheiße ! Goog is now $450.5

I knew that yahoo has an earning report today but expect it to be neutral. I was wrong. Yahoo dropped the ball on the earning and dragged GOOG down to.

I created the diag spread when goog was around $466. Now at around $450, I priced it using TOS software, the spread shrank from $19.30 to $15.87; The paper lost would be about $350. However, the vol should be increased tomorrow so, it might have more value left than that. I'm not panic yet.
 
Great job on the profits...somehow I think your hooked:p and will become a trader for life....
Quote from momoneythansens:

Good job. I can't wait to see your overall PnL at the end of the month. It looks like you've had a great month. Too many positions for me to keep track of!

MoMoney.
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SPX dropped 9 points and VIX was 12.60 (+.59). It's a good day to roll the calendar.

I rolled the calendar Jan/Mar 126 put to be Feb/Mar 126.

Sold SPY calendar Jan/Feb 126 put for $0.80 to create Feb/Mar 126 put calendar. The current market price is $0.80 debit. I paid Jan/Mar for $1.30 debit so my Feb/Mar 126 put cost me only $1.30-0.80 = $0.50 ($0.30 positive expectancy). I won't count the profit yet until Mar is done.

Sold SPY Feb 125 put for $0.75

Before

At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put

+1 Feb 124 put

At IB

-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Mar 126 Put (1.30 debit)
+1 Feb 124 Put
+1 Feb 123 Put
+1 Feb 122 put

After

At TOS
+1 Jan 123 Put
+1 Jan 124 Put
-2 Jan 125 Put

+1 Feb 124 put, -1 Feb 125 put.

At IB

-1 Jan 123 Put, +1 Jan 121 Put
-1 Jan 126 Put, +1 Feb 126 Put
+1 Feb 124 Put
+1 Feb 123 Put
+1 Feb 122 put

Sold SPX Feb 1190/1205 for $0.65 credit

Total SPX credit spread
JAN 1165/1175 (sold for $.50)
4x Feb 1190/1205 (sold for average $0.5)
2x Feb 1195/1210 (sold for average $0.5)

Total Greeks on SPY and SPX (use spy as weights)

Delta 110, Gamma -44, Theta 4.35, Vega -48.97
 
Quote from skanan:

Bought GOOG Mar 460 call, sold Feb 490 call. Total Debit $19.30.

This debit was done with IB in my Non IRA account just incase it turns into a big lost, I can deduct my tax. This is the biggest and most directional trade this year for me.

I viewed GOOG with support around $440.
Stop loss when Goog drop to $430. The breakeven on the downside is around $455 for 2/18/06 expiration.
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I'm estimating a 700bp loss in post-release vols to 33%. Your b/e will occur at $461 at 33% vol on the Mar 460C.
 

Attachments

Thanks! Lesson learned :

1. Don't fool around with earning
2. Do take post earning into forecasting of vols as well.

What is 700bp ? Does it translate to 7% vol decrease ?

Did I do the right thing by taking advantage of call skew by selling Feb 490C ?

If I want to take advantage of call skew, would buying vertical call be better instead of diag where my Mar 460 has vega risk from post earning ?

Mine is one contract and it's huge for my account . Your journal has 100 contracts!

Thanks again riskarb. I hope you get fresh snow today.

Quote from riskarb:

I'm estimating a 700bp loss in post-release vols to 33%. Your b/e will occur at $461 at 33% vol on the Mar 460C.
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Quote from skanan:

Thanks! Lesson learned :

1. Don't fool around with earning
2. Do take post earning into forecasting of vols as well.

What is 700bp ? Does it translate to 7% vol decrease ?

Did I do the right thing by taking advantage of call skew by selling Feb 490C ?

If I want to take advantage of call skew, would buying vertical call be better instead of diag where my Mar 460 has vega risk from post earning ?

Mine is one contract and it's huge for my account . Your journal has 100 contracts!

Thanks again riskarb. I hope you get fresh snow today.
More...

Yes, 7 points from 40 to 33. Very good thing to sell the skew edge, unfortunately the strip volatility loss will likely exceed skew gains. Well, the vertical call earns from skew and but loses a bit from a drop in mean-vols, but is very directional. Vol-sensitivity won't mean a thing if we drop 30 points on shares. You could buy a deeper itm call on the vertical to reduce vega, but that ensures greater delta risk.

There isn't any foolproof methods of eaning from vol-smile into an earnings release. I'm short vega/gamma/smile in order on decreasing sensitivity. V/G are fairly equal in $sensitivity on my positions.

Yes, thanks. We received about a foot of fresh powder today, more on the Mtn.
 
Donna,

Thanks!

Before I get into trading I was an avid snowboarder. Someone rear-ended my car and caused disc herniation. I'm not supposed to ski any longer and had to find something else to do.

Somehow, for me, trading is similar to skiing. Both get me hooked. I guess I can enjoy doing this for a while unless I loss my $3K tuition fees due to reckless behavior.

Quote from DonnaV:

Great job on the profits...somehow I think your hooked:p and will become a trader for life....
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Bought to close AAPL Jan 80 put for $0.55.

Previously, I sold AAPL JAN 75/80 put for $0.75.

Because of the forecast, the stock dropped below $80 in after hours trading yesterday. I knew that I had to get up in the morning.

I sat my alarm clock 6:30 am, and watched appl price action for about 5 minutes and bought back the 80 put for $0.55.

So, the profit is $20 but I knew that I screwed up on this trade by not closing it earlier when there was not much time value left. Another lesson learned. Every time, I had to get up at 6:30 to deal with stock/options, it's a bad sign for me. It is a good indication that the trade went wrong.
 
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