8 percent implied on a 680 is like a 54 dollar straddle.. pricey... but its a double up if the guy actually did buy the straddle.. in this case.. the strangle would have killed it..
It's not worth the risk. Earnings straddles/strangles is a sure way to lose money. The OP is a wacko.
what is "OP" in these cases.. i keep thinking about trying penny options at every momentum pretty girl stocks that seem to tumble down after one or two misses.. the amount of strikes these things cross is incredible.. GMCR.. NFLX and priceline might be next.. look at CMG.. same deal there..
Yes, I agree that straddles are risky, but sometimes you need to look at risk/reward. 8% (it was actually less than that) implied move is low risk and high reward given that PCLN has a history of making big moves. I am not claiming to be an expert here. I don't buy straddles to hold them for earnings, usually speaking.
at the six hundred strike 2 bucks.. turns into twenty in the morning.. you can bet alot more of those then you can straddles and be wrong... besides.. i'd probably only buy puts.. it seems like to me most of the time when things really go crazy outta implieds predictions its down..
in apr 2008, goog rallied 20% on earnings. Earnings are very bidirectional - unlike normal days where what you are saying is more true.
Goog has had some upside earnings blow outs.. But i somethings think of goog as the exception to the run.. They game the analysis they don't give projections if i'm correct? Like do they give guidence? From a quick look up seems like i'm right.. Which without any inside information for analysis to anign their straight wild guesses.. Goog likes the black box operations... You know no one really knows the spread they make... From a google adsense accouunt pays out pennies compared to what they collect in ad premium from adwords clients... Plus Goog is a wild strike crosser
I think better to trade it directly if you are not sure about the move. like wait till the earning moment, then short it or long it. I was dealing with LEAP, I bought some puts 5 &4, but this thing seems up/down to make me confused, when it dip to 5+ (new low), I started to buy $5 put, but the heck of it is it went up to 6.5 (almost 30% jump), that made me hesitate to buy more. but I strongly belive this thing definitely is going rotten, will drop to 3+ in near term. because of the low volume in option, did not enter too much puts, today all turns out more than 200% gain. when look back, I suddenly realized, why I just shorted it directly, when earning comes out and it start to tank, just short as much as I can, may get better results. from this lesson, before pcln earning, I was thinking to buy 750 call, or buy 600 put, but not sure. from the chart, this thing seems more likely UP. that made me indecisive. I do not want to buy anything price greaten than $3. so I wait, when i saw it tanks in the earning moment, I just shorted it at 635, added more at 600, covered it at 581.made some, this strategy works!