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joeythebull

I am new to the options game here and was wondering if anybody can give me some constructive criticism.......

I just bought Jan 110 calls VLOAB
Underlying VLO
Price 8.90.


I am going to try and hold still it splits(Dec.16) and try and capture a pre split run-up. I am starting off small. From some of the more experienced Options players, do you think this is a good play? Why? Why not? Would the Jan 115 calls gave been better(4.00).Please no flames I am trying to learn.

Thanks
 
Historical volatility (50%) is near a 1 year high and implieds have gone down from the 50% level to high 30's. Market is anticipating a quiet period ahead.

If I were you, I'd sell the Dec 115's or perhaps even sell a Nov 110 to lower your cost basis.

Going long vol when vol is at highs is usually a losing proposition.

Hope this helps.
 
Valero may run up before the split, but from what price? The stock could very well be trading South of par if CL takes a dump. Your trade is atm, 50 delta and the risks are delta/gamma over vega. Vol isn't a huge factor with 5 weeks to expiration.

Sell some odd-lot shares into rallies if you can; no more than 10-20 on every $3 spike[per 100s].

I agree with Cuspis -- selling a front-month call inverts your theta from short to long and maintains a long volatility position. The best-play right now in your position. Sell a Nov 115C today if you can.
 
Joeythebull

Generally to make money with buying options you need to be very selective in timing your entry.

With the recent run up and this being Friday, I would be very cautious buying calls.

See attached chart of the S&P. Don't fight the TIDE or join it late in the week.

www.elitetrader.com/vb/showthread.php?s=&postid=887755#post887755

Be sure to look at the table in the next post of the above url.
 

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Quote from joeythebull:

I am new to the options game here and was wondering if anybody can give me some constructive criticism.......

I just bought Jan 110 calls VLOAB
Underlying VLO
Price 8.90.


I am going to try and hold still it splits(Dec.16) and try and capture a pre split run-up. I am starting off small. From some of the more experienced Options players, do you think this is a good play? Why? Why not? Would the Jan 115 calls gave been better(4.00).Please no flames I am trying to learn.

Thanks
More...

you bought it with an open gap on the chart from 11/2 (and another larger gap looms near 100) -- see it ?

I know not all gaps have to fill -- but I dislike buying options with open gaps like the one (that's now filled) on VLO.

however I think VLO probably tries to make a new high before topping out - just based upon its recent fundamental b.s.

only question is does it first trade back to near 100?

Ice
:cool:
 
Great point Iceman, I am now looking at the gaps on the chart(should have done this before I bought,lol), I am down pretty big today and have learned that this was the wrong time to buy this. If it heads toward 100 i will take my lose and chalk this up as a lession learned. I hope it will bounce back, all the energy stocks are taking a beating today. Thanks.
 
Quote from joeythebull:

Great point Iceman, I am now looking at the gaps on the chart(should have done this before I bought,lol), I am down pretty big today and have learned that this was the wrong time to buy this. If it heads toward 100 i will take my lose and chalk this up as a lesion learned. I hope it will bounce back, all the energy stocks are taking a beating today. Thanks.
More...

I want to thank you for posting about VLO as I am "stalking" a position. :D

When you posted I was gong to short (via puts) but I have way too many open positions to start a new equity. However I think VLO will try to re-test 115 again - thus I am looking for a long entry (probably should be short now though). Of course the problem with that "prediction" is that maybe all the rah-rah good news that came out last earnings is priced into the stock.

:eek:

bonne chance joeythebull

Ice
:cool:
 
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