Options day trading is very risky with lots of unpredictable and maddening events. The trading is much messier than trading a stock with good volume. For me, I want to limit my risk by limiting the amount of money I have exposed while still benefiting from large stock moves. It's really a game to only be participating when there is a strong trending stock intraday and get out when that trend is weakening. To me it is foolish to buy options priced more than about $5.00 for day trades as is exposes too much money. I would much prefer to buy options at $1.00 or less but that all depends upon stock price, time to exp., spread, volume avail., strike distance, and delta.
From reading the replies, you'd think OP was asking how to perform brain surgery. His question was extremely simple and it also has an extremely simple answer: Stock goes up, volatility goes down.
Ok, am I looking at some OTHER Apple? I see your execution ref 667.8ish (can't see your odd-lot on ALLQ, but more traded around that level vs that ref) and close of the day at 656.22. The option acted in perfect accordance to the delta, vol change was neglibible (see attached graph): execution price + ref * (close/ref-1) * delta =~ 11ish which is the closing price of the option.
TSkTSk..thank you, I was going to respond in a similar fashion.. Not sure why people were not answering the OPs actual question and instead giving their opinions on why options are risky...
Smile- I agree on the pricing..I tend to buy .75-1.50 same month and 1 strike OTM if possible..Still learning here..
Right Apple, wrong date. I posted my message yesterday (Aug 20) and you are apparently talking about today, Aug 21. But thanks for looking into this! I think my initial analysis was correct. IV did go way up on Aug 20 in anticipation of a "big move". So the option I happened to buy was just too expensive at the moment. The AAPL option volume was insane. IV then went down again some time mid-day on Aug 20 so my OTM option lost value even though the price did move in the right direction. I didn't know what to look for last night so I did some research after posting my first message. After looking at a typical range of VXAPL I now have some idea when AAPL options are "cheap".
I could be wrong but I think yesterday it was somewhat different: both stock and volatility went up at some point. IV spiked then went down. But the price has been growing steadily.
Here's a nice chart of the aapl vix index.... vxapl http://data.cnbc.com/quotes/VXAPL/tab/2 As mentioned, notice how the iv spikes on aug. 20 on the 5 day chart from 22 to 30 probably due to the huge demand for aapl calls on that day. It then quickly collapses from 30 to 27. I did not know about these vix indexes : http://www.istockanalyst.com/financ...-like-apple-vix-vxapl-futures-are-coming-soon Many thanks for educating me.