My Options Play

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Quote from Multioption:

Some traders believe so much in support/resistance. In fact, one particular trader told me yesterday that SNDK would rally today, sure the stock rallied, but.....

For directional options' traders to succeed, the trader's prognosis of the market must not only be correct, the entry point must be spot on.

Perhaps SNDK will drop a bit more...I'm looking. Other stocks like AAPL, UPL, et al are on my radar.
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Guys, let me tell a couple words about SNDK.
My study is constructed on Price/Option Volume/Open Interest analysis.

On presented chart CVR-PVR, where CVR is Call Volume Ratio = Today Call Volume / 50 Day Moving Average of Call Volume and PVR is Put Volume Ratio accordingly, I see increased Put activity on 03/07/06 (PVR=1.93) when stock broke local support line around 56. I believe this Put volume on that day is related to hedge fund activities and fund managers just protected their portfolios.

Last 2 days I see decreased volume in options (today CVR = 0.68 and PVR = 0.69) but slightly positive changes in Calls Open Interest as you see on second chart New Calls – New Puts.
Also there is no sign of speculative insiders’ activities.
So price/volume action suggests a continuation of downtrend to the next support level around 46-47. If stock will reach this support level we should monitor option volume closely. If we see increased call volume (CVR > 2) and positive changes in Calls Open Interest that would mean we reached bottom and stock will reverse or make at least temporary pull back.
 

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I added to my SUNW holding by buying the April 4 calls for .55. Bought 400 contracts. Still holding the March 4 calls. Looking for SUNW to hit 5 in the coming days.
 
May I ask why are playing options on such low price stocks? What's your experience with it?
Quote from thirst:

I added to my SUNW holding by buying the April 4 calls for .55. Bought 400 contracts. Still holding the March 4 calls. Looking for SUNW to hit 5 in the coming days.
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The premise of my option trade is based on the potential of a increased trading range of a stock. From my analysis, I believe SUNW is soon to break out of its range. Even if it doesn't, there isn't much premium to lose. SUNW is one of those stocks that traders no longer want to trade. For one, I am trading for it to go to the top of it's trading range. For the trade, that would return almost 200%. Secondly, I am betting that it will break out of its trading range to the upside. Whether it's more expensive or not doesn't really matter to me - as the implied volatility calculations will make the more pricy issue that much more upstream to swim. My timing isn't always perfect, I try to look for potential expansion in implied volatility trades.

Not sure if this makes much sense, but it has worked for me recently with BRCD and JDSU.
 
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