Quote from atticus:
Not to be critical, but why not trade the ATM juice? You could trade large caps in ATM spreads and combos and do far better as a % of debit req and not trade naked in a hyper-vol issue. Just IMO.
I agree with the premise.
But I don't like the idea of losing control of my trades with a spread.
I know that sounds weird, but I mean it in the context of not being able to buy most spreads that go just a little bad between or below both strikes.
Of course that assumes I was hoping to make more than $100 on the trade.
I sold 6 contracts making $540.
To make even half that amount I would have needed to sell substancially more spreads. Since I could not buy that much stock, if it went between or even slightly below a $45/42.5 spread, i would have needed to close it for a max or near max loss.
With a put, it can drop 35 - $40 and I'll still make money owning the stock with covered calls.
I don't like the idea of dumping stocks at good prices.
I can't own the stock if i want to make any money with a spread.
HOWEVER, I am NOT suggesting others consider this trade. Going naked is risky and i know it.
But then again, my $44.10 BE price is sooo far below where analysts and investors liked it, my price is not that unreasonable, considering I can drop my BE price below $40 with calls if it comes to that.
I like the tech support I see in the $45 - 50 area, per the 5 year chart. Hence my willingness to take a chance going naked on an extremely volatile stock.
I had it on my watch list for $60 for quite a while. Once it tested the $58 area, I decided to take a chance.
But I agree it is a risky trade.
What is it you would have recommended for a $45 strike?
