Juicing expiration day premium with short straddle?

Discussion in 'Options' started by a529612, Jul 21, 2006.

  1. Does anyone here like to do short straddle on expiration day to try to capture the remaining premium decay by the close? You should get a pretty decent idea where the pin action is around noon on expiration Fri. I shorted 5 GOOG July 390 Call and 5 July 390 Put for 3.9 around 1pm and covered the trade at 3:58pm for 0.2. Not too shaby for 3-4 hours of work.
  2. Have you established a track record in your own mind on this? I was watching OIH and saw 130 as the point of pain but didn't press it as it was just a thought as opposed to a verified plan.
  3. Shoulda sold it at the open - that straddle was -28.95 for the day. In fact anything near the money would have made money. You have to go out to the 440/440 to see +4.90.
  4. But you don't know where the pinned strike is at the open. The stock traded all over the place in the morning. It could be 380 or 390. The goal is to minimize this risk by not establishing the position until the afternoon and when the pinned strike becomes apparent.
  5. jj90


    I was watching the same trade. Looks better than going long directional like I did. Then again, GOOG did fall 10 points in the morning then promptly reversed and made back those 10.
  6. So do they figure P/L for the day based on yesterday's close? I have no idea where GOOG options opened today. Were the high premiums due to high IV before the earnings announcement?
  7. All I can say is massive negative gamma play and leave it at that.
    Daddy's boy
  8. it works alot of times. But then you get expiration months where the stock shoots up or down past your straddle break even points. Very risky.