A Trade for next Monday.

Discussion in 'Options' started by TimtheEnchanter, Jul 16, 2020.

Shall I push the green button?

  1. Yes (it not my money)

    3 vote(s)
    42.9%
  2. No (I would not do this trade with YOUR money!)

    4 vote(s)
    57.1%
  1. Bekim

    Bekim

    Did you price in the predicted IV crush?
     
    #11     Jul 16, 2020
  2. I am not sure what you mean?
     
    #12     Jul 16, 2020
    • IV crush is irrelevant.
    • What counts is will TSLA trade above $1800 or below $1230?
     
    #13     Jul 16, 2020
  3. Bekim

    Bekim

    Oh ok
     
    #14     Jul 16, 2020
  4. Overnight

    Overnight

     
    #15     Jul 16, 2020
    TimtheEnchanter likes this.
  5. SunTrader

    SunTrader

    What is the point?
     
    #16     Jul 16, 2020
  6. I think this merits a bit of elaboration...IV crush is irrelevant if held to expiration. Op mentioned exiting after earnings but before expiration. IV frequently drops after the earnings announcement, so a big crunch could adversely affect the position. Also, your theta decay on this position would be horrendous.
     
    #17     Jul 16, 2020
    TimtheEnchanter likes this.
  7. smallfil

    smallfil


    Market makers make their monies keeping the bid and ask spreads as wide as possible. In some cases, you end up losing monies when you had a small profit at the time you were trying to get out. I usually, wait the very next day. The reason is they are bidding down the prices, the next day, they would be bidding up the prices on those same options to sell it. Might as well be on their side, would be more advantageous to us.
     
    #18     Jul 16, 2020
    TimtheEnchanter likes this.
  8. Bekim

    Bekim

    I don’t know how anyone could say its irrelevant when it’s a trade through earnings.
     
    #19     Jul 16, 2020
  9. If you hold the options all the way thru expiration of the contracts (i.e: 1:15 PST on July 24th), it's irrelevant. The profit/loss will be based purely on the intrinsic value of the position, which depends only on where the price ends relative to the strike.
    Up until that time, it is absolutely relevant. However, at current Vega levels, I'd be much more worried about theta than IV.
     
    #20     Jul 16, 2020
    ironchef likes this.