SNDK - my first credit spread

Discussion in 'Options' started by lenwhistler, Mar 29, 2006.

  1. Ok thanks.......I actually made my first mistake on this trade, I didn't check when earnings where. I found out the date after I placed the trade :eek: .
     
    #11     Mar 31, 2006
  2. SNDK stock: $57.52
    SNDK APR 60 PUTS: $4.70 bid.

    No need for concern yet. You have to understand that the put buyer on the other side would have to be a <b>complete moron</b> to exercise his long puts while they have any kind of time value priced in. You understand why, right?

    Secondly, for various reasons it is <i>generally</i> better strategy to use <b>calls</b> for bull spreads and puts for bear spreads.
     
    #12     Mar 31, 2006
  3. Len, I would recommend you look at Thinkorswim. I am very impressed with everything over there, as are most people. Just click on the BROKERS link at the top af any page.

    Don-
     
    #13     Mar 31, 2006
  4. I never thought of it until now.

    * Put buyer puts me 500 shares of SNDK @ $60.00
    * $60.00 - $4.70 = $55.30
    * $57.52 - $55.30 = $2.22
    * Stock sold @ $2.22 discount.

    Those then would be debt spreads instead of credit spreads, correct?
     
    #14     Mar 31, 2006
  5. I have heard of them, but never visited the site. Thanks for the tip.

    I will check them out.
     
    #15     Mar 31, 2006
  6. jnbadger

    jnbadger

    Ditto. The analytics are awesome. You can set up a demo account to try it out for 10 days.

    Just a question... Have you checked out optioncoach's thread- SPX Credit spread trader? You have probably seen it. I've been lurking there for months and have learned a ton. It just seems as though index spreads are easier to deal with as far as earnings season goes. IV is definitely an issue right before an issue comes out with earnings.

    Hope this helps a bit.
     
    #16     Mar 31, 2006
  7. Took only 2 days for this to "tank". I will update when I close, hopefully SNDK can bounce back to $60.00 before April 21.
     
    #17     Apr 3, 2006
  8. No I haven't. But I will within a few days.
     
    #18     Apr 3, 2006
  9. Position still open after almost 2 weeks. Interesting to see first hand how the upcoming earnings (April 20) is affecting the IV to my disadvantage.

    SNDK @ $59.17
    April 60 put @ $3.60
    April 55 put @ $1.30
     
    #19     Apr 10, 2006
  10. Position closed
    SNDK @ $64.26
    Buy to close April 60 put @ $1.15
    Sell to close April 55 put @ $0.25
    Gross Profit $575.00
    Commissions $140.00

    Net Profit $435.00

    I closed before expiry because of the earnings this Thursday.
     
    #20     Apr 18, 2006