I screwed up, I'm still learning.

Discussion in 'Options' started by Arnie Guitar, Apr 19, 2006.

  1. I have to remember to include earnings season into my decision to take a position.
    I have an April call vertical, and an April put vertical(iron condor?) on a stock, and I was thinking, why are these premiums so fat? Then last week I learned that they announce this week:eek:......duh, what a dope. I'm tempted to close them out, but I am pretty far OTM, I'm just afraid not far enough...

    I have alot to learn.:(

    I can see where diagonals are a little safer.:)
  2. This close to expiration you could likely take your credit spreads off for a profit, depending on when you first sold them. If you can capture 80% of the credit you've done well.
  3. I'm not trying to turn you away from options trading at all, just giving you my experience.

    I'm going to get back into trading full-time soon so I went over my logs I kept during my 4+ years of trading. One thing I found was that in the first 2 years I did pretty well just using the same strategy over and over again. Equity day trading with 20min-5hour holding time.

    It wasn't until I started trading options that things started getting more and more difficult. Other things came into play too like taking my capital out to get married and buy a house.

    To be trading options you really need to have a deep understanding of them. And I mean DEEP.

    Best of luck and keep us up to date on your progress.
  4. Arnie every type of trade has a diff r/r profile. Diagonal's are not particularly safer. I put on an IC on IBM in Feb thinking that Mar stock would go up and Apr stock would go down and my IC would work. It actually did but even with IBM at 81 and change I took off the put short (80) which is where I think the vulnerability lies. What you can do is wait until tomorrow or Friday and see which strike is most vulernable and as suggested close out just the short and capture a large % of gain. IC's are a good choice on low vol stocks/indicies that have sm movements so I think there was probably nothing wrong in your trade/
  5. Thanks everyone for posting.

    Well, I had a Strangle on AAPL, short April 60 puts and
    April 75 calls. They announced after the closing bell, and I was
    a little nervous with the stock at about 66. I closed out the position with a small profit, but would have done better just letting it expire. There was just this little voice in my head saying,
    "Don't be greedy, take your profit".
    I have a large position in a stock that announces tomorrow,
    I think I'm OK. I've got an IC on it, and I'm pretty far OTM.
    Going on what's been happening with MOT, AAPL, INTC, after they announced, I think I'm gonna be alright.

    I'll let you know.

    Thanks again, everyone,

  7. with the stock at 66...your right you should have let it expire...although a lot of ppl would say you were right to close. It's a personal thing and whatever you are comfortable with is what's important. thats what you learn in options:p
  8. Chagi


    I'd be interested to see the premiums you sold your puts for and what your payoff scenario looked like.
  9. I thought when you sell an OTM put, and buy the next further OTM put,
    then sell an OTM call, and buy the next further OTM call,
    on the same stock with the same month expiration, that's an Iron Condor.
    And I thought when you sell an OTM call and an OTM put on the same stock with the same month expiration, that's a strangle.

    I'm wrong?

    I guess I really am a dope!
    I'll stay quiet for awhile.......:(

  10. jhickman


    It's called a short strangle, i.e. unlimited risk to the upside and big risk to the downside.
    #10     Apr 20, 2006