Seeking Alpha

SteadyOptions

View as an RSS Feed
View SteadyOptions' Comments BY TICKER:
Latest  |  Highest rated
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of November 28 [View article]
    Kevin, you bought the whole spread for 0.40 or only the calls?
    Nov 30 12:44 PM | Likes Like |Link to Comment
  • A Low Risk Trade In Green Mountain Coffee Shares [View article]
    Well, low risk means different things for different people. I learned the hard way that the moment you say “it’s so cheap, cannot go any lower”, few weeks after it’s down another 10-15%. The trade is definitely has lower risk than owning the stock itself, but those options are so expensive for a reason. Look at IV – it’s over 80%. And we are after the earnings, not before. Calling any trade involving options that expensive a low risk would not be accurate.
    Nov 30 12:41 PM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of November 28 [View article]
    Kevin,

    You recommended the spread at 0.55 (mid point, not sure if you could get it for that price). At the moment the puts are worthless, and the calls are 0.55/0.65.
    So despite a monster move, the trade is about breakeven or 5-10% gain at the best.

    Of course if you bought more calls or planning to hold for bigger move, you can still make more.
    Nov 30 11:47 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    I played something similar (my original post had wrong strikes, it should be 310/320/330/340):

    Buy AZO Dec11 320 Put $4.73
    Sell AZO Dec11 310 Put $2.57
    Buy AZO Dec11 340 Call $3.63
    Sell AZO Dec11 350 Call $1.59

    You are playing for earnings with bullish bias. Since I plan to sell before earnings, I wanted to be more neutral, with the stock around $329.

    I was really surprized by the good fills, despite wide spreads and low volume. Lets see if the exit will be as good and easy as the entry..
    Nov 30 11:39 AM | Likes Like |Link to Comment
  • A Low Risk Trade In Green Mountain Coffee Shares [View article]
    The covered call strategy is equivalent to selling naked put with the same strike. So you could sell the $49 naked put for about the same premium ($4) at the time of this writing. So the question is: are you ready to own GMCR at ~$45? If the answer is yes, then it's a good trade.
    Nov 30 11:25 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    I'm going to try trading AZO with short condor. Got pretty good fills - 4.2 debit for Dec. 410/420/430/440 condor (puts and calls). Will see how it plays out. The IV is still pretty low, it should increase at least few points.
    Nov 30 11:12 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    But those investigations make the DMND stock more volatile which is good for us, isn't it?
    Nov 30 10:53 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    Kevin,

    The earnings season is becoming really light. I like the CIEN trade (the earnings date is not yet confirmed by the company as far as I could see). For AZO, you are going slightly bullish, and now after the stock moved, I assume the strikes have to be adjusted 10 points up, right?

    GIII options have REALLY wide spreads, not a good thing.

    I also have DMND in my list, but the earnings date is not yet confirmed.
    Nov 30 10:36 AM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Yes, those are great results, but in November the performance was much less impressive for several reasons. First, the “quality” of many stocks was less good (low priced, wide bid/ask). Second, the overall environment was less favorable – most of the time the markets moved sideways and the stocks didn’t have a chance to develop a decent move which is essential for the strategy to work. But you cannot expect any strategy to work all the time with same success.

    With TIF I played some “games”. I started with 75/70 strangle (paid 5.40) and when the stock reached $69, I rolled to $65 puts, leaving the 75 calls, reducing my cost by 1.90. Then the stock rallied again and I sold the 75/65 strangle. Total gain was $58 which per spread which is 11% on the original cost or 17% on the reduced cost.
    Nov 30 09:19 AM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    RajRana,

    I’m also curious about your strategy. Checking GOOG earnings for the last four cycles shows mixed picture. In the last cycle the stock was slightly up in the last 2-3 days, but in the previous three cycles it was flat to slightly down. There is no clear trend, and this is not surprising – if it was, people would recognize it very quickly and just buy calls 2-3 days before earnings and sell them for almost guaranteed profit.

    What is this “BEST” strategy? I found this webinar - http://bit.ly/w41EKY but they are asking $49 for it.
    Nov 29 06:43 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Yes, 11% gain. The stock moved sideways and IV didn't rise enough, but still decent gain. Could close for 15% gain but got greedy.
    Nov 29 04:48 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Regarding liquidity:

    Sometimes you get surprising results, despite low liquidity. I just sold my OmniVision (OVTI) Jan 11/12.5 strangle for $2.00. The bid/ask was 1.85/2.05 (1.20/1.30 for the puts, 0.65/0.75 for the calls). The trade was filled at 1.27 for the puts and 0.73 for the calls, ABOVE the mid. Not sure how this is possible, but the fact remains.
    Nov 29 02:01 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Regarding the losses - my largest loss was 35%. Losses in the 25-30% range are fairly rare. If the stock doesn't move and IV increase is not enough to neutralize the negative theta, in most cases the losses are in 10-15% range.
    Nov 29 01:54 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Kevin, I agree with most of your comments.

    You are correct that the best opportunities are during the first month of the earnings season. But there are plenty during the second and the third month as well. For example, second month has stocks like PCLN, FSLR, HANS, SINA, RL, GMCR, DIS, MCP, ADSK, NTAP, CRM, TIF and more. Third month has LULU, CIEN, BBY, ADBE, RIMM, JOYG, NKE, WAG, BBBY, JBL and few more. I traded 22 strangles in July, 16 in August, 7 in September, 24 in October and 26 in November.

    I played MA in July for 8% gain while the stock moved 0.8% during my holding period and I held too long. In general, I didn’t notice that I had more trouble to get out of the trade than to get in, unless I wait till the last moment. Usually I try to sell about an hour before the close, especially the less liquid stocks. But I will probably stop trading the less liquid and low priced stocks.

    I usually play similar size for most trades and this dictates the number of contracts. You never know in advance which trade will be more successful, so I don’t want to guess and change the trade size every time. I had some nice gains on less “obvious” stocks, like 28% on GES, 36% on ADSK, 60% on HOG, 105% on DIS and 107% on NTAP.
    Nov 29 01:24 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    MON, GOOG, VMW, CREE, HOG, ISRG, AAPL, JNPR, APOL, WYNN, EBAY, RVBD, FCX, CMG, SNDK, NFLX, AMZN, FFIV, BRCM, SH, CMI, X, AKAM, IDCC, GLW, CSTR, BIDU, LVS, EXPE, RCL, CLF, MGM, CME, JDSU, CF, GRMN, MA, QCOM, DNDN, VCLK, FSLR, IACI, FLR, APA, HANS, ITMN, BSFT, PCLN, FOSL, SINA, STEC, RL, GMCR, DIS, MCP, NVDA, SHLD, CTRP, DELL, ADSK, ANF, NTAP, YOKU, GME, ARUN, INTU, MRVL, CRM, HPQ, PWRD, PSS, DY, TIVO, TIF, OVTI, GES, ARO, FNSR, ULTA, LULU, DMND, PAY, CIEN, BBY, ADBE, RIMM, JOYG, NKE, WAG, KMX, BBBY, JBL, MOS, POT

    The list is being updated all the time. Obviously some stocks work better than others. High priced stocks are usually better than low priced stocks.
    Nov 29 11:02 AM | 1 Like Like |Link to Comment
COMMENTS STATS
2,225 Comments
906 Likes