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  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    Looking at the CIEN trade, I can see that it is currently trading around 1.68 down about 15% from the price you mentioned (1.95). I purchased the Dec. 11/13 strangle and it is also down around 15%.

    Two conclusions here:
    1. It is not always better to buy early. In this case the stock almost didn't move and the trade is losing money.
    2. Next month trade is losing around the same percentage as the front month. Explanation: theta is smaller, but IV increase is almost non-existent for the next month. For the front month, at least part of the theta is neutralized by increased IV.

    Of course of you want to hold, next month is a better option - you have time to recover if the post-earnings move is not enough. But it's kind of surprising that they both lose about the same amount so far, I would expect the front month to lose more.
    Dec 6 07:59 PM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 12 [View article]
    Bad idea.

    You reduce the cost only by 10%, but if FDX goes beoynd your short strikes (90 or 72.5) you start losing money.
    Dec 6 07:44 PM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Eric,

    There is still a lot of fine tuning for me. I tried the next month couple of times and it didn't work as well. The IV increase was minimal and the stock move produced less gains due to smaller gamma.

    Time of selling is inconclusive. Many times I sold around noon just to give up extra 10-15% of the gains. It also depends on the stock. I make notes which stock is better to sell in the last hour and which around noon. For example, holding GOOG till the last hour didn't work out. CIEN was sold for 1.50 last cycle and my note says that in last hour it was worth 1.90. I think on average, about an hour before close works the best.

    3 days actually might be better. I do it 5-7 days on average to give the stock better chance to move. I found out that most of the gains come from the stock movement and not IV increase - is this your conclusion too?
    Dec 6 07:33 PM | Likes Like |Link to Comment
  • Why I Dislike Holding Strangles Through Earnings [View article]
    Kevin, lets just agree to disagree..

    I'm going to track the results of one day short condor (closing prices the day before the earnings vs. the earnings day). Will follow and post here.
    Dec 6 07:25 PM | Likes Like |Link to Comment
  • How To Profit From Sideways Markets - An Options Strategy (Part 1) [View article]
    Thank you guys, I was checking who is reading my articles..

    Yes, risk management is the key here.
    Dec 6 07:22 PM | Likes Like |Link to Comment
  • Why I Dislike Holding Strangles Through Earnings [View article]
    Hindsight is always 20/20. 35-40% is not a major move, it’s an historical move.

    GMCR was already down 40% from its peak before earnings, NFLX was down 60%. There are many examples of stocks which were down a lot before earnings and recovered after earnings (or at least were down only slightly) because the earnings were “less bad than expected”.

    You also expected big moves for BIDU, ARUN, TIVO and others which moved much less than expected.
    Dec 6 02:14 PM | Likes Like |Link to Comment
  • Why I Dislike Holding Strangles Through Earnings [View article]
    NFLX maximum intraday move in July 2011 cycle was -11%, final move -5%. Average maximum intraday move in the previous 4-5 cycles was 11-13%, final move slightly less.

    It was logical to expect maybe 15-20% move (which is also considered a major move) but 37% move was definitely not common.

    GMCR moved slightly more in the last few cycles (18-20% intraday 14-16% final move) so 41% move was also much more than expected.

    Those are two extreme examples, check out most of the stocks - you would do better by selling the strangles before earnings, not buying them (protecting the strangles with further OTM strangle would probably be a good idea).
    Dec 6 12:06 PM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    You also bought when the stock was at 320 and went much further OTM, right? So you had bigger move and more leverage.

    My trade was low-risk low-reward, although if the stock moved few more points, I could probably get 30-40% too. I got 20% from just 3% stock move (329-->339).
    Dec 6 11:53 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    I sold my AZO trade yesterday for 20% gain.
    http://bit.ly/t28Mbm
    Dec 6 11:37 AM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 5 [View article]
    The question is how realistic it was to expect 10% rise in a stock like AZO. If it was, the option would price it. Meanwhile the stock is slightly down and those options are losing 30%+.

    I hope you sold your AZO options. almost any combination would be a loser today. I sold yesterday for 20% gain. Actually considered selling the hedged strangle yesterday. It would produce 35-40%.
    Dec 6 10:19 AM | Likes Like |Link to Comment
  • 2 Ways To Use The Great 'Reverse Iron Condor' Option Strategy [View article]
    Great article Kevin. I will definitely look at weekly trades.

    Regarding GOOG trade, I'm not sure how easy it would be to execute. I checked pre-earnings prices for GOOG short condor with 10 points distance between the short strikes. The mark was around 4.50-4.60. Assuming that you will have to pay at least 10 cents above the mark (this is a 4 leg trade, so this might be even optimistic), the trade will cost at least 4.60, probably more. So the maximum gain is less than 10%. Not sure if it's worth the risk.

    Of course you can go with wider strikes, but then your risk is higher as well. GOOG usually has decent moves, but in Jan. 2011 cycle it moved only 2.5%.
    Dec 5 08:26 PM | Likes Like |Link to Comment
  • Option Plays To Consider For Stocks Reporting Earnings The Week Of December 12 [View article]
    PTRY and FDS have very wide spreads but other trades look great.

    Have you looked at BBY and ADBE?
    Dec 5 08:17 PM | Likes Like |Link to Comment
  • How I Trade AutoZone Before Earnings [View article]
    Closed the trade for 20% gain. Not bad for 5 days of holding with low risk.
    Dec 5 03:06 PM | Likes Like |Link to Comment
  • Research In Motion Earnings: An Options Trade That Makes Sense [View article]
    Okay, thanks. I don`t think you will see new options or strikes on Thursday, but I might be wrong.
    Dec 5 01:23 PM | Likes Like |Link to Comment
  • Research In Motion Earnings: An Options Trade That Makes Sense [View article]
    Week 2 expires on Dec. 9, I don`t think this is what you want. I understand the principle, but since the strikes for Dec. 16 expiration are 16, 17.5 and 19, this trade will be problematic to execute. If RIMM goes to 17.5, you can go with 15, 16, 19 and 20 strikes, but you will need a larger move in this case.
    Dec 5 01:07 PM | Likes Like |Link to Comment
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