No volatility crunch?

Discussion in 'Options' started by countdrak, Jul 18, 2013.

  1. Thanks again! Steve/Joseph thanks for explanation. Making some sense now! I was simply deconstructing what happened to understand it better. Thanks!
    #11     Jul 18, 2013
  2. Maverick74


    I'll explain it for you. Here is what your synthetic position was. You were long 100 shares of stock at 26.88 on the close. You were long "two" puts. One actual and one synthetic. The actual put was .51 and the syn put you were long was .63. The stock is now 29.83. So you made 3 pts on 100 shares and lost 51 plus 63 on the puts or 114. Your net was about 190 right? That is exactly what was suppose to happen.
    #12     Jul 18, 2013

  3. Take this as a sign that you need to read alot more about options.. the implied vola number going into earnings designates the speculation built into the market of the impending jump.. yes vols implode, but price jumps respectively.. alot of times volatiltiy is priced right going into earnings.. and the stock jumps just as much as was built into the options..

    yes vols go up into earnings.. but that doesn't mean the actual nominal amount goes up of the options.. time decays, and vols hold the premium up to a certain extent.. vols can go up into earnings and you can easily still lose money selling before the jump.. there are more factors acting on options then just volatility.. you should read a few books in their entirety before trading them.. losing money without any idea of why it happen is a tough way to learn take it from me .
    #13     Jul 18, 2013
  4. Jgills


    this is the 100% best explanation you are going to get for your pnl.
    #14     Jul 18, 2013