Bob, actually there was a very well known reason why the IV spiked sooner than usual - MacWorld. It is an annual event whereby the market has come to expect some big announcement from SJ. I haven't checked myself, but I hazard a guess that each late Dec/early Jan the IV spikes earlier than it usually does before regular earnings periods. Anyway, on the issue raised by Ursa regarding the synthetic position you would be holding in the lead up to earnings, employing the strategy you are, he highlights a very good example of the real power of understanding synthetics. As he pointed out, you probably wouldn't really want to be holding a strangle through numbers (though I know one guys who somehow makes good dough doing just that. . .go figure). Knowing synthetics and incorporating them into your decision making process reveals 'risk' that we often don't see as being there. I learned this from someone whose knowledge of options has been seriously disparaged on this board, and yet it is pretty much the crux of the matter. Oh well! Equally though I hear where you are coming from, if you are making money, without compromising your comfort level/risk tolerance, then sometimes that is as powerful thing as any when it comes to trading. I have seen part time traders make consistent money by being very good at one thing & using careful management of it.
I've traded options for 4 years now. Mostly spreads and sometimes naked contracts. With average return of 25% annually. I strive to keep 25-30% returns in up or down markets. The win rate of my spread trades constantly improved up to 2006. If my SNDK and APPL spreads expire worthless tomorrow I will have 100% win rate in spreads for 2006. I trade bullish OTM put spreads and bearish OTM call spreads. Average position size of 20 contracts. As to your question you can trade options with InteractiveBrokers, which has the lowest comission rates (75c per contract). I personally like ThinkOrSwim, which I'd recommend over any other broker. Those guys are fantastic. They will also match fees of you current broker should their fees be higher than you current ones. ToS has very good software platform (the best I've used so far) and no inactivity fees. Hope this helps.
Would you attribute your win rate to your superior stock picking skills or superior options trading skills? What criteria are you using to be bullish or bearish the underlying?
But, "02 How do you calculate commissions on spreads? For spread trades your commission will simply be the number of legs in the spread multiplied by $9.95. Each leg represents a trade." ~B
And way expensive for *most* retail traders. Here's the best option broker. And best broker, period... http://www.interactivebrokers.com/en/accounts/fees/commissionStockIndexOptions.php?ib_entity=llc <=10,000 Monthly Contracts* Premium => USD 0.10 USD 0.75 per contract USD 1.00 1 Contract @ USD 2 Premium = USD 1.00 2 Contracts @ USD 5 Premium = USD 1.50 USD 0.05 =< Premium < USD 0.10 USD 0.50 per contract USD 1.00 3 Contracts @ USD 0.075 Premium = USD 1.50 Premium < USD 0.05 USD 0.25 per contract USD 1.00 5 Contracts @ USD 0.03 Premium = USD 1.25 10,001-50,000 Monthly Contracts* Premium => USD 0.05 USD 0.50 per contract USD 1.00 1 Contract @ USD 2 Premium = USD 1.00 2 Contracts @ USD 5 Premium = USD 1.00 Premium < USD 0.05 USD 0.25 per contract USD 1.00 5 Contracts @ USD 0.03 Premium = USD 1.25 50,001-100,000 Monthly Contracts* All Premiums USD 0.25 per contract USD 1.00 1 Contract @ USD 2 Premium = USD 1.00 2 Contracts @ USD 5 Premium = USD 1.00 > 100,000 Monthly Contracts* All Premiums USD 0.15 per contract USD 1.00 1 Contract @ USD 2 Premium = USD 1.00 2 Contracts @ USD 5 Premium = USD 0.30