Just bot AAPL DD

E

Eliot Hosewater

Sold Nov 170P/180C and bought Dec 165P/185C for 1.85.

It's not quite like playing GOOG the day before expiration, but still.

Let's see what Jobs has to say after the bell.
 
So what happens if IV drops from say 55% to 40% after earning?

Those options seem pretty rich right now, and I thought DD's were long vega.
 
Quote from wenzi:

So what happens if IV drops from say 55% to 40% after earning?

Those options seem pretty rich right now, and I thought DD's were long vega.
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It is, yet you cannot just add up Vegas across different expirations.

The front month IV usually drops more than the back month, so since he's short front month IV and long back month he can still make profit from the IV drop.
 
Quote from wenzi:

So what happens if IV drops from say 55% to 40% after earning?

Those options seem pretty rich right now, and I thought DD's were long vega.
More...

Then shouldn't the Nov shorts become cheaper and I can buy them back for less? If the Dec IV drops less then I can still sell them. Aren't you supposed to sell higher IV?
 
Quote from forex-forex:

This looks like an interesting trade. I will be watching on the sidelines.
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Yep, I am paper-trading this DD.....never thought about it before although I've heard of it. Will be interesting to see what happens.
 
Quote from Eliot Hosewater:

Sold Nov 170P/180C and bought Dec 165P/185C for 1.85.

It's not quite like playing GOOG the day before expiration, but still.

Let's see what Jobs has to say after the bell.
More...

Eliot,

I have a real bad feeling doing this type of trade with equities before an earnings announcement. With an index, it seems safer. With an equity, 1.85 doesn't seem to be enough to compensate for the 8.15 risk.

I hope it works out for you though!

AZD
 
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