Registered: May 2012
07-26-12 09:59 AM
in true piker style, here's a cheap way to ride that same train for the next couple days without $30k. even with eyes closed, $600 or so at risk (given the closing price, open/tomorrow price is up for grabs.) one could even go as high at the same loss on the above 100 shr lot with stop loss, $900.
the $305 weekly calls (two strikes out, only getting cheaper), are/were going for a $1 each. any move to $309ish (target) between now and friday close puts those at $4+.
a $295/305/315 fly around $3, would show profit with a nice wide range about your targeted move of $301ish to $309.
a couple/few of the single calls, and a single $30 wide fly, would cost you ~$500 (add to whatever your taste for loss/risk on the trade is by adding more single OTM calls at ~$100.) it would also give a similar return as the 100 shr lot, if that move to $310 happened. around $900-$1000/per. ... but if it's a runner,... forget about it, that single call held on to can amaze you, nevermind the lost butterfly.
if it closes sub- $295, you're out the same as the stop loss at $295, with entry around $301, and out of the trade come the weekend.
nice doing singles (after a move), and spreads (before the move) and flies around these stocks, much lower commish on them.
spreads and liquidity are the issues instead with such options, but the meat of the matter is if the move appears in the underlying or not, (in the time you've paid and waited for it to happen.)
the option market maker has no option but to make that market. i can't imagine how they do it, in a world of moves like CMG, without knowing the future, how could one ever make that market and not get killed by moves like that?
now if only the AZO would pay off as fast and nice, right guys? ha. CMG has me only even for the year, ate a few months of spreads and treading water before the couple AUG spreads left finally kicked in enough to make up for it all, and i had not added anything further out. i ditched those two winners that morning and haven't looked back yet at CMG.
know i'll be on a few single calls though come thurday, especially friday, the weekly market in options is like "free leverage fridays" for market hours.
thanks for your numbers and heads up, good luck.