I Gambled on RIMM, Now What?

[jrlvnv]

Quote from freewilly:

it does not make sense. RIMM DEC 65 call today, high was close to $2.6 and low was close to $1.6. How did you you get yours filled at $3.3?

You mean you bought RIMM DEC 65 puts? DEC 65 puts today, high was around $3.8 and low as around $3.00. Your $3.3 was in that range.

OP said he bought the Janurary 65 calls

 

[Pension_Admin]

OP, why not hold the whole thing til expiry?

I understand realizing profit feel great, but if the realized profit is kept in the same trading account, the money is actually still in the pool. There isn't really much difference between realized and unrealized profit. (You could realize the profit and quickly lose it in the next few trades.)

Imagine tomorrow you are entering a whole new trade, then think about where your stop would be, then just use it to get you out.

However, if you believe there is a better use for the profit, then close the trade immediately to "lock in" the profit.

PA

 

[Pension_Admin]

Quote from TheGoonior:

Thank Santa for looking at the wrong week on the calendar and take at least 50% off.

Perhaps sell a Jan call with a bid closest to your purchase price to lock in a free trade on a few?

If you're brave, you could fade the gap in the AM as well.

Expiration tomorrow and holiday next week will probably lead to some market weirdness.

I am new to options and I am just curious about how selling the call work. Would that be limiting the upside in this case, since the counterparty has the right/option to buy the underlying from you at the strike price (lower) when the price go further up?

 

[bb3pt]

Howie, I would take 1/2 off first thing tmr morning.

 

[TheGoonior]

Well, I threw that idea of selling the call out off the top of my head, because I thought you'd get $3.30 for an ATM once it opens, but it doesn't look like you get anywhere near those prices on my TOS table, so it probably wasn't a great suggestion after all.

 

[Ghost of Cutten]

I think you should double up by rolling your options into further out-the-money calls close to expiry. All in baby!

 

[JTG]

Quote from ess1096:

I'm just curious, since you were just "gambling" on the earnings, why not the December calls??

Good question - the reason I chose Jan. calls was because if my guess was incorrect, I would still have a bit of time for the stock to come back to, or near my initial entry point.

 

[JTG]

Quote from freewilly:

it does not make sense. RIMM DEC 65 call today, high was close to $2.6 and low was close to $1.6. How did you you get yours filled at $3.3?

You mean you bought RIMM DEC 65 puts? DEC 65 puts today, high was around $3.8 and low as around $3.00. Your $3.3 was in that range.

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Nope, it was the JAN 65 Calls, symbol RFYAM.

The range was 2.72 - 3.70.

 

[JTG]

Quote from Mvic:

See if the Nasdaq will comp you a room?

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LOL - it should be the market maker for RIMM who comps the room, shouldnt it?

 

[dhpar]

Quote from talontrading:

it's a silly suggestion to "hedge" by shorting the stock. read my answer above... that's how i'd play it unless i wanted to play the direction of the stock... but that's a different play tomorrow.

people screw around thinking theyre hedging but they are just complicating the position. for instance... how many deltas are you going to hedge? what are you going to do when you hedge say 80 deltas and then the vol collapses? when are you going to unwind this "hedge"? gamma risk gets silly middle of next month... the whole thing is silly... sell the freakin options don't "hedge" anything.

if the suggestion was driven by the idea that RIMM will open too high that's ok (probably misguided but ok)... but it's a poor answer for the options play.

keep it simple. if you can unwind the trade dont make it more complicated with another leg.

but you CAN'T unwind this trade AH!


on the rest; are you sane? what is complicated on trading the underlying when you trade options?
do you trade for living of for institution? anybody trading for living would take some money off the table righ away.


let's say RIMM trades at 71 AH. you pretty much know from top of your head what is the delta of your 10 jan 65 calls. say that after decent earnings you are comfortable with taking half of the position off the table and sell 300 shares. so you now have 3 (synthetic) puts and 7 calls instead. there are some good reasons why 10 options like that after the gap is better than simply 10 calls.
when the market opens you can choose several ways to trade out of it by combination of options AND stock. if the stock corrected back to 65 you at least made 1.8k with few hundreds lost on options.

your idea of trying to get out on the open for high vol AND high AH price is not a trading strategy. it is like putting bids at 10% discount and hoping that the mess of the upcoming open will fill you...
the advice of selling half after not filled immediately on market open is "strange" to say the least - you will almost certainly get whipsawed most of the time, i.e. sell very low.


note: if you want to play vol only then you should not have 10 naked calls to start with. the trade OP did is a delta trade - not a vol trade! that's where the most of P&L comes from and therefore that's how you primarily have to manage it.