How To Play Apple's Earnings This Tuesday [View article]
Buying straddle before earnings will generally lose money because straddles are the most overvalued, especially in this case of AAPL's elevated implied volatilities. Last time AAPL's moves after earning were very narrow. To capture high implied volatilities, the best options strategies would be to sell iron condors (reverse iron condors) or to buy calendar spreads. I have just used these with GOOG's earnings announcement, and they are quite successful.
10 Rules For Trading Calendar Spreads [View article]
Hello Kim!
A new comment notice leads me to this article again.
Great article I should say, as you always write. And it is a pity I don't see them often recently in SA.
Now I have a comment too: According to your rule #6 and using your example, if AAPL falls, you would initiate a lower call calendar spread. Would that be a double-down strategy basically? You know how dangerous it could be with AAPL since later September last year.
In general I notice you have a lower risk tolerance. The time value drops more quickly when it is close to expiration. Yes there is gamma risk. But it just means there is less chance for the stock and hence options to move around if it heads to a wrong direction.
Selling ITM puts is like long a stock, the risk is obvious, especially if it's on margins. Look at what is going on with AAPL in the past a few weeks. BIDU could be more risky because just one rumor from China could send it down $10 at open. Experienced options traders always hedge their positions and have exit points.
Apple Offering Excellent Entry Point [View article]
If AAPL is a good buy at $577, it would be even better at $557 today. So this lenthy article at its best offers the readers a loss of $20 per share. If at its worst...
An Easy Options Strategy For Apple Bulls To Protect Against A $50 Drop In The Stock Price [View article]
It is scary with short 640 puts when AAPL reached $624 today. While there are of course many ways to hedge such drops, this article is probably not a place to discuss, since the author even did not address my comment above.
An Easy Options Strategy For Apple Bulls To Protect Against A $50 Drop In The Stock Price [View article]
This is a very odd way to protect long stock positions. People usually buy puts or put spreads to protect the downward moves of stock price. This is actually shorting put spreads, which is a bull market strategy. One has to look at the margin requirements for shorting these put spreads. Another odd thing is to guess that AAPL would at most drop $50 by November options expiration. If it is true there are many much better strategies to profit more. If it is not true, again these recommended strategies would be very poor ways to protect the AAPL price drop.
High Risk/Low Volatility Anomaly Sets Up A 2 Way Option Play [View article]
I have to say that you misunderstand VIX. This index is constructed to indicate possible future market moves, not the moves that market has already made. Please check what "implied volatility" means, how it is derived, and how options trading impacts on future underlying moves.
How To Play Apple's Earnings This Tuesday [View article]
10 Rules For Trading Calendar Spreads [View article]
10 Rules For Trading Calendar Spreads [View article]
A new comment notice leads me to this article again.
Great article I should say, as you always write. And it is a pity I don't see them often recently in SA.
Now I have a comment too: According to your rule #6 and using your example, if AAPL falls, you would initiate a lower call calendar spread. Would that be a double-down strategy basically? You know how dangerous it could be with AAPL since later September last year.
In general I notice you have a lower risk tolerance. The time value drops more quickly when it is close to expiration. Yes there is gamma risk. But it just means there is less chance for the stock and hence options to move around if it heads to a wrong direction.
Apple's Earnings Fall Is Completely Unjustified [View article]
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Apple Offering Excellent Entry Point [View article]
An Easy Options Strategy For Apple Bulls To Protect Against A $50 Drop In The Stock Price [View article]
An Easy Options Strategy For Apple Bulls To Protect Against A $50 Drop In The Stock Price [View article]
Trading The VIX Without Using Volatility Products [View article]
High Risk/Low Volatility Anomaly Sets Up A 2 Way Option Play [View article]
High Risk/Low Volatility Anomaly Sets Up A 2 Way Option Play [View article]
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