If I think a stock is going from $25 to $35 overnight...

Discussion in 'Options' started by Crude Man, Jan 23, 2011.

  1. What is the best option trade?
  2. Generally, the midpoint calls. In this case, the front-month 30C.
  3. zdreg


    call your lawyer before the SEC calls you.
  4. nLepwa



    Especially if you cashed out on the front-month call :D

  5. spindr0


    Ditto this but if time until expiration was short, it could be the 27.5 call if it existed.

    Another way to look at it would be the lowest near month strike OTM call that is available for .05 cents.
  6. I knew I'd get a SEC reference.

    I just wanted to learn how to win big in the bio techs before FDA approvals.

  7. A straddle might be the best way to go.
  8. If very close exp. bull call spread.
    If far from exp, OTM calls.
  9. 1) The option premiums and option skew will tend to be too inflated to do anything. You have to be spread-off to conserve your trading account.
    2) If the put option premiums become larger than their strike price, then you may be able to lock-in some "free money". :cool:
  10. spindr0


    You win big by getting the direction right :)
    #10     Jan 24, 2011