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Sold ERTS Apr 55 puts today @ $.90
- Thread starter Crevalle
- Start date
Puts have lost about .55, good for you. I've done considerable gap research in the past. Most are filled within .3 daily atr's and then go their merry way from there. One of this magnitude will most likely just bounce initally. Remember x-friday in sep-01? That was one of the biggest closures I've seen.
As for myself, I'm glad ideas and trades are brought up and in real time. I follow this board on a regular basis and although I'm quite inexperienced, this gives me a look at what the more experienced are thinking and trying. In effect, I'm able to benefit from another person's experience.
I'm glad the board is active and look forward to more posts in real time trades.
I'm glad the board is active and look forward to more posts in real time trades.
Quote from Trajan:
There are so many interesting plays out there. Far out(Sep) out of the money wings look interesting to me. I would sell the Apr 55 straddle and buy the Sep strangle. Who knows, if my paperwork goes through soon for my new account, I may actually put on a position.
This may be a stupid question, so I apologize if it is, but I'm curious. What's the value in doing a "calendar iron butterfly" as opposed to a regular iron butterfly? It seems the risk profile of doing the (just an example) 50/55/60 April I.B. is significantly more attractive than writing the April 55 straddle and buying the 50/60 Sep. strangle. Even extending the Sep. strangle to far out of the money options (35p and 75c) still doesn't seem to offer an attractive profile to me.
Thanks in advance,
Steve
With IV at the low end of the historical range, I'm inclined to buy premium/vega. I'm not expecting vols to increase in the short-run. It's also true that I can't necessarily predict when Vol might change. So, I want sell premium in the short to help pay for long dated options. Right now, most of the stocks I'm looking at aren't attractive for the way I typically trade.Quote from SteveL91:
This may be a stupid question, so I apologize if it is, but I'm curious. What's the value in doing a "calendar iron butterfly" as opposed to a regular iron butterfly? It seems the risk profile of doing the (just an example) 50/55/60 April I.B. is significantly more attractive than writing the April 55 straddle and buying the 50/60 Sep. strangle. Even extending the Sep. strangle to far out of the money options (35p and 75c) still doesn't seem to offer an attractive profile to me.
Thanks in advance,
Steve
With that said, the front month fly does look seemingly attractive at these level. Tech stocks just aren't moving. Another sector, biotech, the story very similar. Historically these stocks are volatile, but you could get killed waiting for a move if you're long premium. If you read some of the other threads we have on these, you'll notice that fly's are the best way to play them because you put them for next to nothing or sometimes zero and your risk is limited. This is typically the case for expected announcements like what happened in CTIC recently, I'm talking about stocks that don't an imminent announcment, but could.
I have a bunch of them on my radar screen right now, DNA, OSIP, AMGN and so forth which you don't know when they'll move. You had no warning with DNA the other day. To play these while they act dead, like in DNA, I'll sell front month premium and buy the wings. These would probably be done on some sort of ratio so that a move would generate the right deltas.
So, while I'm not against flys, it seams that the crushed IVs enable me to pick up premium cheap, by buying the wings(or strangle) and hedge, or pay for it, by selling premium in an actual low vol environment. There was a thread last year called The Perfect Option Position. The discussion there is good and similar to what I want to do right now.
Edit: I will also add that I'm on a diet right now and wings sound really good along with a lot of beer. I haven't had junk food or beer in 2.5 months.
Quote from Trajan:
So, while I'm not against flys, it seams that the crushed IVs enable me to pick up premium cheap, by buying the wings(or strangle) and hedge, or pay for it, by selling premium in an actual low vol environment. There was a thread last year called The Perfect Option Position. The discussion there is good and similar to what I want to do right now.
Interesting, thanks. I think I was too wrapped up in the current position instead of thinking longer term. Regardless, I'll check out the thread you mentioned.
Good luck with the diet. I'm starting mine in a week or two.
Thanks again,
Steve
Ridiculous.