My Options Play

[Rob on Business]

Quote from cnms2:

At optionsXpress: $4,177

That's a very nice return on capital req'd - I wonder why others aren't doing the same. I haven't gotten to selling yet, especially because I don't have the capital yet (still recovering from my GOOG 400 call loss last expiry - acc't up from $500 then to ~$1k today) and haven't gotten through enough of the "Bible" yet to know the risk-return. Very slow going...
I know this is Multi's thread, but just FYI, I've been playing BBY's last pullback for a nice profit til today when the underlying is moving stronger than the indexes, indicating a bullish reversal, now riding a call on same; same deal for DNA's pullback, now riding it up to at least $100.
I wonder if Multi got out of his AX call at today's spike of $61.25 when call was worth over $7.

 

[cnms2]

It depends what you need. For my analysis I use a few Visual Basic routines I wrote. Please explain.

Quote from mhashe:
cnms2, do you have the ability to historically backtest a options strategy?

 

[Multioption]

Quote from Rob on Business:

That's a very nice return on capital req'd - I wonder why others aren't doing the same. I haven't gotten to selling yet, especially because I don't have the capital yet (still recovering from my GOOG 400 call loss last expiry - acc't up from $500 then to ~$1k today) and haven't gotten through enough of the "Bible" yet to know the risk-return. Very slow going...
I know this is Multi's thread, but just FYI, I've been playing BBY's last pullback for a nice profit til today when the underlying is moving stronger than the indexes, indicating a bullish reversal, now riding a call on same; same deal for DNA's pullback, now riding it up to at least $100.
I wonder if Multi got out of his AX call at today's spike of $61.25 when call was worth over $7.

I'm holding AX, hoping it touches 62 and probably fly to 64.

 

[cnms2]

Firstly: you have to be approved to sell naked calls; this means a large account.

Secondly: selling naked calls is very risky; imagine that GOOG gaps up to $480 overnight: how much would be the GOOG 520 Call 2007 worth tomorrow?

Quote from Rob on Business:
That's a very nice return on capital req'd - I wonder why others aren't doing the same. I haven't gotten to selling yet, especially because I don't have the capital yet (still recovering from my GOOG 400 call loss last expiry - acc't up from $500 then to ~$1k today) and haven't gotten through enough of the "Bible" yet to know the risk-return. Very slow going...
I know this is Multi's thread, but just FYI, I've been playing BBY's last pullback for a nice profit til today when the underlying is moving stronger than the indexes, indicating a bullish reversal, now riding a call on same; same deal for DNA's pullback, now riding it up to at least $100.
I wonder if Multi got out of his AX call at today's spike of $61.25 when call was worth over $7.

 

[swordking]

Quote from cnms2:

Firstly: you have to be approved to sell naked calls; this means a large account.

Secondly: selling naked calls is very risky; imagine that GOOG gaps up to $480 overnight: how much would be the GOOG 520 Call 2007 worth tomorrow?

I like to sell puts for a stock at the support price for which I would like to own the stock. I.E. I sold VLO 90 1/06 puts on friday. If VLO dropped to 90, I would probably look at buying some shares anyways. If the stock doesn't dip that low, well, I still make money selling the put. It's elementary, haven't been around this forum for very long, I'm sure most here already have this figured out...

 

[riskarb]

Quote from cnms2:

Firstly: you have to be approved to sell naked calls; this means a large account.

Secondly: selling naked calls is very risky; imagine that GOOG gaps up to $480 overnight: how much would be the GOOG 520 Call 2007 worth tomorrow?

Exchange req for selling that GOOG call is < $6,000. The thing carries a few gammas and approx. 15deltas at 415. You're talking a loss of 18 handles, tops, at 480 on shares.

Stock's down 10handles since he sold the call and he's made nearly that on the short. Jan07 is all vega, no gamma.

 

[hajimow]

I like to sell puts for a stock at the support price for which I would like to own the stock. I.E. I sold VLO 90 1/06 puts on friday. If VLO dropped to 90, I would probably look at buying some shares anyways. If the stock doesn't dip that low, well, I still make money selling the put. It's elementary, haven't been around this forum for very long, I'm sure most here already have this figured out...

That is the way I do the trades ands I have been successful but you should always consider that sometimes support levels are not a good price to buy. Basically it depends on the stock. I loved to get DELL at 27.5 so I sold PUT for that last month. I wanted to sell PUT for 32.5 for December at $2.60 that I did not do it because my plate was full.

 

[hajimow]

To GOOG traders.
You guys believe that GOOG is nicely priced at $410 and if it goes to $500 it will be overpriced and good to short and if it goes to $350, it is a screaming buy. I see mad cow diseases in GOOG.!! You will get burned one way or the other. There are many other ways to make money in the market. GOOG should be considered as an eye candy for those with accounts less than 500K.
GOOG can jump to $600 or $280 in two months . Are you ready for that?

 

[cnms2]

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=916343>

Quote from riskarb:
Exchange req for selling that GOOG call is < $6,000. The thing carries a few gammas and approx. 15deltas at 415. You're talking a loss of 18 handles, tops, at 480 on shares.

Stock's down 10handles since he sold the call and he's made nearly that on the short. Jan07 is all vega, no gamma.

 

[riskarb]

Jan vols are nowhere near 45. Yeah, I'd assume a gain in vols with a $60 gap, but the question is; are you long, awaiting this $60 gap on the shares? If not, your analysis isn't worth the effort it took to output the excel sheet. I priced in zero gamma, off the cuff w/o any model; haven't got the handle on pricing curvature in my head, but working on an approximation.

If you were advocating a bullish gamma/delta/vol position you were proven dead-wrong.

FWIW, I was short 50 GOOG Dec 410 combos at 21 from Friday, closed at 17 with the weekend decay into a rise in stat vol. Keep buying goog premium and I'll be on the other side of that trade... well, have been anyway.

The fact remains that the 520 call is trading under $30. Distro contraction coupled with flattened skew as a result of the share decline. >$10 per contract on $14 lower on shares.

You were stating? Were you advocating buying this cheap call?