GOOGL - Bought 2 April10 557.50 Calls at $0.50 Thought I would share this trade with you guys. I expect GOOGL to have a pre-earnings rally this week so I bought some OTM calls, the order was filled at 15:41:01 EST today. GOOGL at $545.99. Bought 2 April10 557.50 Calls at $0.50. 3 Days to expiration.
Sorry to inform you that this will not win. Google will not close above 544.15 at the end of the week. Better luck next time! (edited to fix close price)
ok, wait - I don't track equities a ton, just looked at my model against it but - you're stating that GOOG is (at the time of your post) $545.99? I show last of 537.02 on Google finance, but my charts state a close of 544.80... wtf? lol this affects my close price value.
0% probability through expiration; I should have been more clear. But definitely don't hold it through expiration. Take any profit you can get, lol...
I'm very bullish on the overall US markets and expect the Nasdaq to break its all time high very soon. Earnings may be a catalyst to get things going and I would like to get my foot in the door beforehand. GOOGL's weekly options are cheap and it doesn't take much to get a 100% plus increase on the calls or puts. Since I'm bullish I will buy the calls, and to prepare for the unexpected (homerun) I will not cap any potential gains with a debit spread. My risk/maximum loss is already defined.
The probability goes from 16-18% all the way down to 1%-2% after 19 minutes of time decay and a $1.13 drop on a $500+ stock? That's why I'm very skeptical about the usefulness of the option greeks.
Option's greeks are an instantaneous value of the rate of change.. They change all the time.. Maybe there was a better delta bet you could have made with a calender or something.. sell in front of earnings, buy a farther out at the same strike that doesn't expire before earnings.. maybe near the money.. This is a far better strategy for a delta pre earnings bet.. imo..