Low volatility: How to sell CC in a dull market?

Discussion in 'Options' started by a529612, Aug 25, 2006.

  1. I'm long GOOG and want to generate cash flow from selling CC. The slight OTM calls are currently selling for peanuts. Does volatility normally take a dump like this in late summer? Should I wait till Sept before pulling the trigger?
  2. jllm03


    The volatility takes a dump until about 30-40 days before the next Earnings release. (sometime around Oct 20th)
    Plus it has been stagnant below the 400 level for a couple weeks.
    Start looking for the volatility to pick up after the Sept expiration.
  3. Do you think volatility will ramp around 9/11?
  4. You mean you didn't sell the Jan 500's in May like I suggested?
    They were $14 then. they're $2.50 now. :)
    Wish I'da sold 'em. :(
  5. That was a huge call. Best Ive ever seen

    I took 5000 of them on your say so.
  6. Don't I get a cut from that? :D
  7. Why not sell Jan 07 otm calls? At least you'd collect some time decay.
  8. jllm03


    That is the way it has been playing ...Volitility will start to build up once the Sept options expire. It has done this over the last couple earning periods.
    I am not even going to start looking at it until after the expiration of the Sept.
    One nice thing NOW about the volatility being low... If you are bullish GOOG, look at buying a Long 340-350 LEAP (Jan 08)
    Use it for your covered call, once the stock has gone back near 400+ area (200 day ma), then sell an ATM or OTM call.

    FYI...GOOG, CCI (14) is starting to approach the Zeroline again, with setting higher lows. This usually does one zero line reject before it goes ahead and breaks thru...just an observation...
  9. In my experience it is easier to pick bottoms in volatility than pick tops. What's more is that the risk reward analisys works out better (at least for a trader of my skill- I can see a post by riskarb making me look a little dumb coming up soon) from the long option side during low volatility environment. However when ever I try to trade vol I end up making more money from directional trading, not a bad thing but it limits my insight into vol trading.
  10. If you think that the period of low volatility will persist for some time, you could sell a straddle or a strangle.
    #10     Aug 30, 2006