FYI - MSFT earnings this Thursday, July 19.

Discussion in 'Options' started by OptionsOptionsOptions, Jul 16, 2018.

  1. TheBigShort

    TheBigShort

    Did not see this.
    Earnings have 2 vols priced into them. The ambient vol ( regular vol) and the earnings vol(how big the jump will be). So let's say MSFT moves on average 4.2% after earnings (the jump) and the implied vol was pricing in a 3.2% jump, then it makes sense to buy the straddle. The analyst dispersion was only 8% which explained the low vol into earnings BUT that means there could be a big surprise...
    Market makers price on supply and demand. If they can buy vol in msft and offset the risk in a back month profitably, they will.
     
    #11     Jul 19, 2018