$11+ Thousand PROFIT 3Days on GOOG

Discussion in 'Options' started by Star, Jan 4, 2006.

  1. Star


    My very first Straddle :) ( I have up to now just bought either calls or puts but never have used a Straddle before)

    On 12/29 I bought 10 Straddles on GOOG with a strike price of Jan 420

    12/29 Bought To Open (10) GOOG Jan 420 Call @ $13.10 -$13,112.95 ($12.95 Comm)
    12/29 Bought To Open (10) GOOG Jan 420 Put @ $9.10 -$ 9,112.95 ($ 12.95 Comm)
    Total Cost for Straddle $ 22,222.59

    12/30 Sold To Close (10) GOOG Jan 420 Put @ $12.80 = $12,786.65 ($12.95 Comm + Sec Fee))
    1/03 Sold To Close (10) GOOG Jan 420 Call @ $20.50 = $20,486.42 ($12.95 Comm +Sec Fee)
    Total Proceeds From Straddle $33,273.07
    Total Cost - $22,222.59
    PROFIT In 3 Trading Days $11,050.48
  2. Chagi


    Congrats on the trade.

    I might suggest doing some research into strangles. I think it was the latest issue of Options Trader that had a very interesting article on risk/reward of straddles vs. strangles.
  3. You didn't trade a straddle... you sold the put leaving a naked long call position. You were initially-long approx 600 shares before the stock took off. You would've made 4-6k had you kept the straddle intact. You got lucky, congrats.

    Simply an observation, but what possessed you to go long gamma with 3 weeks to expiration? You sold your puts and held naked long calls before BSC upgraded the stock with their absurd reco? Wow, how many times have you won the 2005 powerball lottery?
  4. Chagi


    Good point, I didn't notice the different dates for the "sell to close" transactions when I read his post.
  5. I'd rather be lucky than good....nice trade!
  6. Star


    Thanks to all for the congrats....Let me try to explain why I did what I did...I thought a Straddle was purchasing to open both a call and a put with the same expiration month and strike price?.....

    When normally I buy just a call when I am bullish on a stock, it always seems to me that the call will go up in value, then go down in value (or vice versa) then maybe go back up etc....So in watching GOOG, I felt for sure it would move one way or the other and when I made a nice profit on whatever way that was, I would close out that part of my so called straddle ( or trade maybe I should call it), and wait until GOOG turns around and goes the other way to make money on the other option...

    You will notice I sold to close my put the very next day after buying it...GOOG went down and the general market was weak but I knew GOOG would reverse and go back so I closed out the put to bank the profit and then I waited for GOOG to Reverse....Which it did and nicely....So when the Call then became very profitable, I closed that out and I won on both the put and the call...and I closed out both to grab my profits while they were there even though I had a couple of more weeks till expiration...

    If I would have waited just another day on the Call, I would have made even more as GOOG continued to go up but you know the saying...Bulls can make money, Bears can make money but Pigs get Slaughtered...

    I hope this explains some what I did and why I did it...(even if it really isn't a straddle)

    BTW..I think GOOG is going to go up more between now and next Monday. Especially this coming Friday :)
  7. Chagi


    Well, again, after reading your post, I would strongly suggest looking into strangles. Basically strangles are significantly cheaper than straddles because they are further out of the money, rather than a straddle, which is at the money (or close to it).
  8. Star


    Thanks, I will look into them.
  9. Star


    Anyone else buy GOOG or GOOG Call options after I posted this the other day?

    GOOG is rocking!!
  10. Star


    I Love GOOG :D
    #10     Jan 6, 2006