My option trades

Quote from ryanpatrick:

Yeah I see the higher risk involved, but I consider the trade today a test of that strangle...Truthfully, I would have rather set up a debit spread on the put and leave the long call open, but I want to see the strangle play out, and like I mentioned earlier, RAX +1394, and FOSL +1134 in profits gave me a total of +2528 in profits already. At worst I'm giving back about $680 from that profit earned today. After all, it did take me nearly the whole day just to decide to put this strangle in play lol. I'm exhausted now, could use a swim in the ocean too. :D
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Ryan,

I have your WTW strangle up on my live IB Trader Work Station, that way I can keep an eye on it while cheering you on!
I also have the YHOO straddle that I formulated earlier today on my TWS as well.
That way we can monitor and compare a high IV very short term earnings play strangle "versus" a 2 month low IV straddle (with essentially no catalyst to move the stock).


Jeff
 
Forex Forex

I was reading the other day, your August trading with way OTM options. How did that come out? The thread petered out and didn´t answerwhat happened?
 
Which reminds me. Sheesh I forgot again!

Oh yeah! I did a study last fall, trying option premiums from 2 strikes OTM up to $10 options in the money. It might interest you to find out, that the best premium ballooning for volatility was found between the $3 and $5 option premiums I dont know why that is, but from now on, will stick to those values, for straight directional buying. I presume it is because of people diddling with strangles, and verticals and such. More buyers maybe?
 
Hmmmnn! I´´ll bite. What was your conclusion? Does it pay?

Do you do it now?

I thought way OTM while cheap, barely moved? Give an amateur your conclusions.
 
Quote from jeffalvinson:

The SPY opened below its Pivot Point (135.20) and has so far
been working its way down to Support Level 2 (134.41).
I suspect it will bounce at or near S2 and at least head back to the PP.
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This morning I mentioned the SPY opened below its (PP) Pivot Point and was heading down to (S2) Support Level 2 and then it would bounce off S2 and then head back to the PP.
Take a look at the attached chart of the SPY Pivot Points now that the day is completed.
That was textbook perfect. Its just a good way to help determine
which way the markets are headed with about 65% accuracy.
Even though the total movement was only about 1.0 SPY point, that translates to 10.0 S&P points.
 

Attachments

The way WTW closed out AH, not sure if it can make a 10% pop tomorrow, but sure liked the way it dropped to $67 or its AH highs at $84. If any of those two price points can hold, I'll take this as a positive.

As for in over my head on this trade, sure....the odds are clearly against me here with 3 days remaining. I did say I was willing to risk this $680 of my profits from the two locked in trades today. I also did say that if I were in it to really make a profit from this trade, then I'd have gone with a put spread on the put side and limit cost from $680 to $500, which would have made it worthwhile. I think we get upside tomorrow though. Why would WTW want to buy its own share at current price levels if it didn't have some sort of plan to increase the share price even higher. If enough fund managers see it that way, then we get a solid pop, at least to $85, possibly a drag into $90. Persuading investors to jump in will be key as FY12 guidance was barely inline.
 
Quote from ForexForex:
I think with the WTW trade you are "biting off more than you can chew", or in other words "you have too much on your plate".
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Quote from ryanpatrick:
As for in over my head on this trade, sure....the odds are clearly against me here with 3 days remaining..
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I think the WTW trade will weigh you down in the future, perhaps if you were not such a glutton you might get better results.
 
Quote from ryanpatrick:

At first look I wasn't too bullish too with resistance on chart at $77.50-$80 usually trumping all else. But it got interest when I went to get a look at WTW's short interest. I saw 14M shares short or a whopping 20% of float. This one could go the way of GMCR and NFLX where a slight beat or even inline report gives a big short cover rally afterwards and WTW breaks above $85. To the downside, I don't see WTW going below $70. With 3 weeks here at $75-$80 range, all the sellers have already sold....The only thing that can push WTW from $78 to $70 is if the earnings just missed......with 20% short float, any large investor who wanted to short is also already in play. The only investors not playing this one right now are the bull investors.

I got it.....I'm going to do a 1 strangle here taking the 82.5 call and 77.5 puts......I'm looking for $70 at most to downside, but I think upside is the wild card. Like I said before, WTW's +47%, -10%, -23%, and -11% swings should give a strong confidence that the stock goes in one or the other direction. Now, I'm not necessarily looking for profits here (FOSL and RAX gave me over $2000 in net profits today still holding FOSL but will sell before close today). Instead, I'm looking to test the strangle play here, and I'll mark WTW as a high beta stock with moves at +/-10% post earnings.
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Hi Ryan,

Where are you getting your short float info?

I'm looking at yahoo finance and only see 7.19M shares short and not 14M...although % of float is still 24%
 
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