It was previously suggested (by you) to sell M straddle because it looked overpriced.
Just quoting your post.
The secret to buying pre earnings straddles
- Thread starter TheBigShort
- Start date
It was previously suggested (by you) to sell M straddle because it looked overpriced.
Just quoting your post.
This would have been a sweet trade as stock opened at $39 and change first 5 minutes... Probably could have closed it out at $3.00 based on opening option prices first 5 minutes.
Nice profit on the vol crush and you have time to get out before stock really ran lower.
Two comments:
1. The stock closed at 41.82 yesterday, so selling 40.5 straddle would be directional. A better way to look at it would be evaluating the 42 straddle which was priced around 3.70 yesterday.
2. Yes the stock opened at 39, but could you really close the straddle at prices anywhere close to the mid during the first 10-5 minutes? I doubt it. And it started to decline pretty quickly, so straddle started losing value very quickly.
So yes, if you were lucky enough to trade a straddle which was lower than the closing price yesterday, AND get out really quickly at favorable prices, you could probably make a tiny profit. Too may IFs, for the trade with unlimited risk.
You can read my qoute right there Kim. Just to let you know, you don't have to hold an option until expiration.
Whatever he's charging for his "advisory" is robbery.
The shares were hovering above/below 38 for the first 30 minutes of trading. Shares didn't break 37.50 until 10am.
"Get out real quick" = 30 minutes? Is Kim using a Telex to transmit his orders?
No I posted when i thought you should sell the straddle which was my original post and clearly posted the pricing. I always sell straddles slightly below stock price for skew and cushion on drop.
The stock was stable the first 5 minutes so could have gotten out at $3.00 to $3.15 at worst.
You cannot just make up whatever pricing you want in theory. I am giving you actual numbers. I use real numbers not hypothetiocals.
I notice you use the words "believe", "doubt", "think" alot in your posts. For someone who claims to do a lot of back testing, I find it interesting that these words are in your vocabulary. Could you explain why you think we would not get filled at mid? I mean considering the usual imbalance between liquidity providers and hedgers, the fill should rather be easy at mid.
LOOL thats how he tricks his customers. He gives them delayed fills after the stock has already moved.
Also, I saw .10 to .15 spread on the straddles earlier so let's say $3.00 was the mid, I will gie you $3.15 but could have shaved off a few cents from that.