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  • 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
  • Research In Motion Earnings: An Options Trade That Makes Sense [View article]
    I think there are no weeklies during the monthly expiration week.
    Dec 5 12:40 PM | Likes Like |Link to Comment
  • Research In Motion Earnings: An Options Trade That Makes Sense [View article]
    Kevin, there is no 17.0 strikes on December options, only 17.5.

    In addition, the $1 condor is very commissions consuming unless you have something like $3 plus 0.10 per contract. With "standard" commissions of 0.70-1.00, you will be just feeding your broker.
    Dec 5 12:05 PM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    I hope you can see the impact of rising IV. Today the stock is almost unchanged, IV is up around 15% and the strangle is worth around $1.75.
    Dec 5 11:44 AM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    Excellent question Tom.

    From my experience, front month works better. IV increase for the next month is very small, the negative theta still exists, but if the stock moves, the gains will be much larger for the front month due to larger gamma.
    Dec 5 09:19 AM | Likes Like |Link to Comment
  • A Good Option Strategy: Exploiting Earnings - Associated Rising Volatility [View article]
    Excellent questions pourhaus,

    1. Yes, usually I'm trying to buy on the up days, but also look at the IV of the stock itself. Sometimes it the general market IV and specific stock IV don't move together, but in general you are correct and this is a very good point.

    2. It depends on the profit that I have. If I start with deltas ~25, after some move the deltas might be 45-50 on the winning side and 10-15 on the losing side. If I have a nice profit (20-30%) I will sell and see if I can roll to the next strikes.
    Dec 5 09:14 AM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    Thank you Richard. I think you summarized it very well.

    You are right, the exit strategy is very important. On the loss side, if the stock doesn’t move and IV increase is not enough to offset the negative theta, it’s a personal choice depending on the risk tolerance when to get out. Like I mentioned typical loss in those cases in 10-15% and rarely 25-30%.

    On the profit side it is more tricky. I had some 100% winners with those trades, but they are rare. Such big gains are caused by combination of quick and big move (usually 10-12%), increase in IV and very close time to expiration (usually less than one week). More typical profit is 30-50%. But I learned to take smaller profits, in 20-25% range if the stock makes a move and just roll to next strikes.
    Dec 4 03:56 PM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    Sorry dsr, I took your comment too seriously..
    Dec 4 11:36 AM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    Basically this trade is about "renting" a strangle for free or almost free for 7-10 days.
    Dec 4 11:34 AM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    I would argue about "risk-free trade", the trade still can lose money, like I mentioned, sometimes up to 25-30%. But this rarely happens. In fact, I had couple of trades where the IV increase alone was enough for 25-30% profit.
    Dec 4 11:31 AM | Likes Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    That’s true, but you can also make 50-100% or more with options in matter of days. You are not comparing apples to apples. Options offer tremendous leverage and flexibility and in many case less risk than stocks. The question is how you are using them.

    A little bit off-topic, probably subjest for a separate article..
    Dec 4 12:59 AM | 1 Like Like |Link to Comment
  • A High-Risk, High-Reward Play On RIM Pre-Earnings [View article]
    Gary,

    I found out that 30% loss in options in a reasonable loss, compared to the potential gains, but of course this is a personal choice. If this is too big for you, you can set your own mental stop loss and exit when it is hit. If the IV increase will not offset the negative theta and the stock doesn’t move, the loss in any case will be very gradual, maybe 2-3% per day worst case. The value of the spread cannot just lose 20-30% in one day like a single option.
    Dec 3 07:19 PM | Likes Like |Link to Comment
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