My Options Play

Update:

STC: 25 LCAV June 50 Call @ $3.10 each.

Profit: $1375.00

Will update when new position(s) is/are initiated!

 

BTO:

75 contracts of AMD July 37.50 @ $2.50 each

 

AMD July 37.50 Call: AKDGU 2.50 +0.30 2.40 / 2.50 iV=42.3% Delta=.46

You changed your strategy to buying OTM longer expiration options ... And today's AMD's earnings report ...

I drew the pay-off graph of a spread -50 May 32.5 call / +75 July 37.5 call. Where the graph is positive, the July call performs better. The second graph assumes a 20% drop in implied volatility.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1037215>

 

The rationale is not far fetched! If market's prognosis is right, OTM options at 60-90 days to expiration outperform ITM with less than 30 days to expiration. I see AMD going the way of PEET, BBY, SNDK, and other trades posted on this thread.

 

Multioption after this trade.

 

You wish!! Why would that be? Perhaps you should come back after July expiration!

 

So thats a 3 month drawdown hold?

Better idea would be to cut losses
Thats going to fall much further,

Its not like AMD gapped up and then came down,
It just gapped down and went down further after lots of funds went on a selling rampage.

The option is @ 1.10 now more then a 65% lost in capital.
Huge risk.


IMO, What you just did -> Bet before earnings was purely gambling

You should trade with the market, betting before earnings may work a few times, but in the end, you'll lose all your money.
Good news are bad news, Bad news are bad news, Sometimes Good News are good news. Espically with a trading stock like AMD, they love to kill the public.



I did a few bets before earnings before, lost a few k
never did it again unless I was sitting on a position with a huge buffer.


Once AMD gapped down , You should have closed out the position in the morning, don't know why you waited, its not like its going to fly back up and rally above yesterdays high...

 

Cutting losses is not the only available option. Position has not been closed yet!

 

I had traded AMD call options prior to the earnings. It worked out well for me. Although the chart was looking like it was in recovery mode, the looming earnings annoucement was a cause for concern. I liquidated a large amount of of call options that was worth a lot less the next day. AMD is looking like it's headed to 25. Good luck though.

 

LOLOL
You gotta tell me where to find more like this....