I bought a few calls last week when the market gapped down on friday at the open, now theyre barely in the green even though the markets are quite some higher than when I bought them, why is that?
It's the vol. If you are buying or selling options you are a vol trader. Even if you don't know what vol is, you're still trading it. My best advice, don't trade options until you've done your homework. Delta is the last risk we pay attention to on the floor, yet it's the first (or only) for many retail investors. If you think a stock is gonna go up, buy the stock (or vice versa of course). If you buy or sell an option, you are buying or selling vol - that's the bet you're taking.
Well, I just thought of something! Instead of buying calls i can buy puts on the Vix! This way I get money even if volatility goes down because that means the vix goes down which means the put rises in value??? By the way can you trade options after hours or pre market? I know I am options noob but I think I am learning because I paid my dues with BIDU.
Free Thinker is right in saying vol crush, and a week of time erosion didn't help you any either. Of course it's the IV of the option itself that counts. The VIX probably correlates to some extent with IV on your option, but it's not directly relevant.
If IV on the SPX goes down, then the VIX will go down, so you might expect that a put on the VIX would be worth more. But in reality, the IV of your VIX put would probably drop too. And time would pass. So you might experience exactly the same thing as you did with your calls - right on direction but still a net loser on your option due to theta and vega loss.
week of time erosion? because its a week after expiration or do u mean expiration week? could i instead buy july calls but then i cant buy that many calls instead of june. then i have less time erosion. Also does anybody whos with does Interactive Brokers if they charge you for canceling or modifying options orders just a few every day, say 10 order?
but i noticed that the puts really rose in value today, maybe volatility isnt so important with vix options
failed trader, just go for it. Whatever ideas pop into your head, just go ahead and put real money into those ideas. Then when you lose money, then maybe you'll start getting it. no easy money.