No kidding! Buying options ahead of an earnings call? Meanwhile, there was a beautiful IV spike ahead of the call that could have been safely and profitably played... But I guess the Greeks are for Geeks, right? [/B][/QUOTE] As another thread title currently goes by one here, INDEED!
Well I guess I haven't read it or opened it yet. But there's another thread on ET that I saw on the home page called "Greeks are for Geeks?" reminded me of the comment above. haha that's all, didn't mean to make it confusing .
Just back from the holidays... Still have $1794.55 from my account. Didn't quite reach my target of $4000, but now I have some experience in options and a full year. New target: $18,000 by end of year. If I can reach that modest gain, I will have learned a lot, either that or $0. Don't want anything in between. I'm going to buy some APOL calls here. Beautiful chart and very quite too. Again, done my homework on APOL, now just testing to see if options are favorable.
Buying options ahead of the earning call might not be a bad strategy, especially if you have reasons to believe that you going to get some realisation out of it. I actually have a screen that does exactly that - looks for stocks that are possible movers vs what's implied by the vols ahead of the announcements. If you look at historical data, implied vols always decline after the earning announcements or earning call. You also usually get significant excess volatility on the earnings days. Except usually there is no trade there - whatever you are going to make on vega, you are going to lose on gamma and vice versa.
ryanpatrick no offense but you are playing Russian Roulette. From what I read you are at most getting experience with the mechanics of options. Though I think you can do this with much less money on highly liquid options with less pain by the time you are done. I think what you're is missing is this... Forget technical analysis please. Can we agree options pay you for PREDICTING price movements? Can we agree that that the price movements of equities can be divided into two categories? 1. Equity prices are determined by the assets - liabilities, + earnings and prospects of future earnings. Or intrinsic value. Earnings, and for that matter most unexpected news is announced before or after the hours of 9:30 to 4:00 when you can't buy or sell options. The overall fundamentals are not always reflected in the share price. Expecting the share price to come to the intrinsic value of company can be a set up for heartache. You can't afford to wait when you own options. It's safe to assume the price is where it's supposed to be. So we can say generally fundamental analysis is predictable for prices in the long run if everything goes right but not faster than the time it takes options to decay. 2. Equity prices are determined by supply and demand. More buying than selling = price goes up. More selling than buying = price goes down. Equal buying to selling = price stays the same. You can predict that people will protect their self interests. Are there times when you can predict if MOST people concerned with a stock will BUY or SELL to protect their self interests? You can put money on people buying or selling to protect their self interests when a positive or negative issue about the company is simple, irrefutable, and is soon to be widely circulated among most people concerned. You've read this far and this is the good part. In my experience this has been when a company is widely, roundly accused of accounting irregularities. And Secondly, when the some components of the debt issues in the U.S. and Europe create an 'end of the world' scare. Please go find your own examples of what I described in part 2. Then share them here please.
Hmmnn! I found this sort of interesting. Index option betting though is slightly different. Indicators work occassionally, but you will lose your shirt if you use them ALL the time, for different market conditions. That said, there are one or two, that sort of give you a short term market sentiment guage. Since options are melting assets you have to trade them fast. I try to get in and out in 5 days or less. Right now with this uncertain market, I can only SCALP small amounts in quick time. Can´t predict when I would get my goal, certainly the TIME DECAY is so fast at this low volatility, that indeed, you can and will lose your premium, even though the market charts show the market is trending. So small amounts of price increase is the goal in this non-trending type choppy conditions. You take a position for a short fluctuation, but only based on a slightly longer time period estimation of market action. I cannot predict that the market will in fact hit my target, but trust that over a five day period it will hit it sometime.
I bought APOL Jan 55 calls at $2.15 on Thursday last week and still have them..Just thought APOL was going to breakout into $60s, have not seen it yet. But the options have barely moved after the initial swings. I just bought 2 though, again, going with correct position sizes this year as I get better at understanding moves in options. I also added 3 FSLR Jan 42 puts at $2.27. Thinking its a swing trade from here $42 back lower after 50-day miss.
With this low volitility, and market trending, I´m looking at WEEKLY CREDIT SPREADS. Paper trading this week, as it has been a year and a half since I did credit spreads and forget how.