I thought I was getting a good deal by selling 300% IV for January, only to watch it soar past 400% IV! LOL I'm not doing anything just yet . . . AZD
There are several ways on how one can take advantage. I have extensively covered this using Google and several other companies for the earnings announcement movements. You may check out on my blog at http://www.OptionPundit.net/ Two ways that I have experimented are Backspread and diagonal backspread. These trades are non-directional but you may choose to be long on the side you are confident of. This will makemoney as long as it moves and move big. Few things one need to consider- 1) Stock price movement to justify the premiums and 2) IV crush. This will affect both the short and long legs of the backspread. And therefore when choosing the strike, you may want to simuate the risk/reward, account for40-50% IV crush on both side and then review what are the breakeven points and see if it makes money. Hope this help, OptionPundit www.OptionPundit.net
Thanks to all for the prompt responses. I'm seeing that making money with my strategy will take alot more research. Is there an options site where I can find more info on IV? Also, if anyone plays this sometime in the next few weeks, I think it would be beneficial to post their trade and the reasoning behind it. Again, thank you to all for the insight.
For IV check out ivolatility.com I have initiated a discussion on my blog. If you would like to stay in touch, feel free to browse the blog or register for alerts. I am surely planning to play with this baby. Profitable trading, www.OptionPundit.net