oldschool getting schooled: CALM exit question

Discussion in 'Options' started by oldschool, Dec 28, 2007.

  1. Stock: CALM
    Position: Bull Put Spread: Jan 22.5/25
    Original credit: .75 x 6 lots
    Price of CALM when position opened: 25.77 (yesterday)
    Price this morning (earnings released): pre-open: 31.10 (9:11am)

    Question: If I feel this stock stays up here or if it comes back in, it doesn't see 26 again until exp...should I just hold the position or take the quick overnight profit? I feel IV slowly dies from here as we have no further news in the short term. If anything, there's a decent short position on this stock which might make the stock drift higher.

    How much does IV collapse after an earnings report or do individual stocks behave VERY differently?

    I factored in a IV decrease of -20% for my risk graph.

    Thanks for any help.
  2. Why wouldnt you have a plan in place before now for a trade exit? Why didnt you ask this question and post the trade yesterday? Its easy to post a winner now and say "oh boy I got this nice winner, now what should I do? "
  3. dipper,

    if you followed my other options threads, you'll know that I've been begging for help here.

    but if you have any advice besides the "lecture", I would appreciate it.

    otherwise, stfu and get your own thread.
  4. (1) You could get out altogether or consider doing a 30-35-bear-call-spread combined with your original position if you believe the stock will remain range-bound as a way to take in more premium. (2) Go to ivolatility.com to see volatilty charts of the stock and how much decay has taken place after prior earnings reports. That should calm you down.
  5. STFU LOL whats the matter you a bit sore about getting called on the carpet? why would you bother NOT buying the 25's back here for 20 or 25 cents taking the profit and leaving the 20's on as a free shot? Do you really think trying to get another dime out of them is good risk reward?

    Then again thats pretty easy to call since the stocks already moved your way.
  6. Don't add to it. Vols have some in too much to make a short-vol leg worth the effort.
  7. FWIW oldschool PM'd me the trade he made last nite because I was considering a trade on CALM. As stated he is basically learning and nothing wrong with asking advise...you can not think of every possible scenario with a trade especially when you are learning.

    I'd listen to Atticus..old school