ISRG earnings play

[atticus]

Quote from zdreg:

your numbers are quite a bit off.the 360 call option which was 35 pts. away at the close closed at 4.30. if the stock would have closed at 365
the 400 option might have moved to 3.45

using closing prices is very approximate since it depends when the last trade took place and the price of the stock at the moment. it also depends whether the trade took place at the bid or ask or in between,
by the time one get's finished the 400 option is likely to be under 3.

It's not terribly complex. The 360Cs went off at 3.70bx4.30a, or 4.00 mid. That's fairval.

The 35-point otm Aug calls will close <1.50 tomorrow, whatever strike that happens to be.

 

[zdreg]

exactly howdo u get from 4 to less than 1.5
the 4 0clock price of isrg was about 325. the 360 call had a fv of maybe 4.

thanks

 

[atticus]

Quote from zdreg:

exactly howdo u get from 4 to less than 1.5
the 4 0clock price of isrg was about 325. the 360 call had a fv of maybe 4.

thanks

I model/trade event volatility for a living. 35 point otm will be 1.50 or lower for August calls by tomorrow-close. I expect some down and out skew, so the puts (35-40 otm) may be slightly bid compared to the equidistant otm calls (dime or so).

 

[zdreg]

"
I model/trade event volatility for a living. 35 point otm will be "

if 35 pts out of the money is 4 today why should it not be 4 tomorrow?

 

[atticus]

Quote from zdreg:

"
I model/trade event volatility for a living. 35 point otm will be "

if 35 pts out of the money is 4 today why should it not be 4 tomorrow?

You're serious?

The vols will drop 1500bp at minimum, post-earnings.

 

[zdreg]

were you a market maker on the options exchange?

 

[atticus]

Quote from zdreg:

were you a market maker on the options exchange?

I've always traded upstairs.

 

[darwin666]

Quote from atticus:

You're serious?

The vols will drop 1500bp at minimum, post-earnings.

huh. .exactly... the EARNINGS is what. .makes the premiums insane. .ha ha.. sometimes when I scan and i find something very lucrative and tempting. the first thing I suspect is. . pre earnings. even very slow moving stocks like MSFT JNJ PEP give good premiums .pre earnings... but when u r suspicious or not sure.. there is no hurry.. u can always play post earnings also..

 

[spindr0]

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Quote from spindr0:
....free money parade!
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Quote from nazzdack:

I'll be the guy with the umbrella and pail.

That's a nice way to descibe that tin cup with monkey act.
Nice look!

 

[spindr0]

Quote from darwin666:

yes.. true.. even if it had popped. from 325 to 360-370.. the 400 calls.. with entire AUGUST.. would be painfull.. probably.. 1.5 or 2$.. who knows...

Maybe even worse than 1.5 or 2 given so much time left. But that's a moot (even mute) point since it dropped. Nice trade!