tag:blogger.com,1999:blog-1520302325239963360.post4993545064736056159..comments2024-01-23T14:04:29.555-08:00Comments on Risk Laboratory: Ophir Gottlieb: Google (GOOG) - Earnings Trade; Pick a StrikeOphir Gottliebhttp://www.blogger.com/profile/14504557662647338626noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-1520302325239963360.post-86112291232735598082010-10-15T11:39:04.221-07:002010-10-15T11:39:04.221-07:00very true. I'll take that into account in fut...very true. I'll take that into account in future posts, thanks.Ophir Gottliebhttp://www.blogger.com/profile/02699643319377083669noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-58114989767545147582010-10-15T06:05:18.677-07:002010-10-15T06:05:18.677-07:00I notice you are looking at stock price close to c...I notice you are looking at stock price close to close across earnings, but what about close to open, since that gap can be much greater than close to close? Since we could trade out of a position the morning following earnings I think that might be useful.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-43620452012682197912010-10-14T13:49:58.760-07:002010-10-14T13:49:58.760-07:00Looks like 4/15 event but in opposite direction :)...Looks like 4/15 event but in opposite direction :)Alexeynoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-60951168506339338132010-10-14T03:59:16.371-07:002010-10-14T03:59:16.371-07:00Thank you for the article. There are a few additio...Thank you for the article. There are a few additional examples to play google earnings...<br><br>http://www.optionpundit.net/iron-condor/how-to-play-google-earnings-2<br><br>You may want to check those out<br><br>Profitable Trading, OPOptionPundithttp://www.optionpundit.netnoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-89731704283902711312010-10-13T19:05:48.295-07:002010-10-13T19:05:48.295-07:00The straddles in LVP are the ATM as of five trsdin...The straddles in LVP are the ATM as of five trsding days before earnings. If the stock moves during that period, that straddle may not be ATM anymore. We will allow to view day before data shortly.<br><br>Doing a trade on earnings one day before expo. really is just a guess. It's a gamma play, one way or the other. I wouldn't spend too much time on this one really. Just watch it - not a good play in my opinion.Ophir Gottliebhttp://www.blogger.com/profile/02699643319377083669noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-35246110638177539872010-10-13T18:49:37.410-07:002010-10-13T18:49:37.410-07:00Ophir,I wonder how straddles are selected for Earn...Ophir,<br><br>I wonder how straddles are selected for Earnings and Divis menu in LVP. Seems all be (randomly?) out of the money compared to EOD price of stock before earnings event (looking at google, for example for 7/15 the pop-up menu shows 460 straddle price and EOD was 490. Won big, of course, next day:)). Also, just wondering - is there any way to prefer butterflies over time spreads and visa verse or both just guessing on where google will pin?Alexeynoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-52027729906975776202010-10-13T13:36:57.024-07:002010-10-13T13:36:57.024-07:00stelios, if you're new to options, I hope cram...stelios, if you're new to options, I hope cramer explained WHY you would use DEEP ITM calls. If not, I'd tell you to buy Jeff Augen's book "Trading Options at Expiration" to learn about volatility collapse (~"vega", the greek that "newbies" usually don't understand). After earnings announcements, option prices experience a similar "volatility collapse" (especially OTM options).<br><br>If cramer explained "vega", he used DEEP ITM options BECAUSE they will NOT experience this collapse (since they're so deep in the money). However, the call you mentioned has a delta of 94 and are priced at $84, so barring an "absolute collapse" in the price of GOOG (>15%), your use of options is not much different than just buying the stock outright, except your using leverage (note: the average post-earnings move in Ophir's table is JUST 4.9%, so a 15% move would be large).<br><br>BTW: If you can correctly pick the direction a stock will move after earnings, how much will you charge me to manage my money! (If you can't correctly pick the direction, then you're just gambling!)<br><br>And like Ophir, I'm not recommending anything, just trying to educate you. Since you're a "newbie" and using options, the inference is that you're using leverage. And if you are a newbie using options for leverage, the REAL INFERENCE is you can't afford to be gambling! :-) ... so I hope you can truly pick the right direction!Milesnoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-59118411518697077902010-10-13T13:05:47.369-07:002010-10-13T13:05:47.369-07:00I'm not sure options markets "expect"...I'm not sure options markets "expect" anything. They really reflect the risk appetite of the market makers. +-28 you refer to is just one standard deviation, it is NOT an expectation. If you use a probability measure, like normal or log normal, you can see what the "likelihood" is that the price stays within one sd.<br><br>If you look at the average of the 540 and 550 straddles, I think you will find the "move" you're looking for from the $545 starting point. <br><br>Also, I'm not recommending anything, just to be clear. Thanks for your comments.Ophir Gottliebhttp://www.blogger.com/profile/02699643319377083669noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-49876043505720719212010-10-13T12:57:58.579-07:002010-10-13T12:57:58.579-07:00If I wanted to play one of your butterflies, I'...If I wanted to play one of your butterflies, I'd want to "guess" a direction and then pick the "strike to pin". However, I'd go wider than your recommmendation because to "guess" the magnitude of the move, option specialists talk about the ATM SD "expectation" of the stock price move. With GOOG at ~$545, it is "straddling" the 540/550 strikes, so an ATM SD is priced about $23 BUT IT IS ALSO OTM by about $5. Would the "expected move" then be $23+5 = $28, so I'd likely choose the $520 or $570 strike ($545+-28)? And why did your butterfly choices not consider this "expected move" calculation?Milesnoreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-15332460415984959232010-10-13T12:48:19.677-07:002010-10-13T12:48:19.677-07:00I'm sorry, but I can't really answer that ...I'm sorry, but I can't really answer that question for you. Gets a little too close to advice.Ophir Gottliebhttp://www.blogger.com/profile/02699643319377083669noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-41438985066545187962010-10-13T12:45:49.968-07:002010-10-13T12:45:49.968-07:00hi im new at options ,but i read cramers book and ...hi im new at options ,but i read cramers book and he said to buy deep in the money call options if you think it going up ,im looking at the nov 460S what do you think???stelioshttp://www.blogger.com/profile/15678010881514434489noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-11662380966416782762010-10-13T12:10:21.030-07:002010-10-13T12:10:21.030-07:00Agreed, we're workin' on it.Agreed, we're workin' on it.Ophir Gottliebhttp://www.blogger.com/profile/02699643319377083669noreply@blogger.comtag:blogger.com,1999:blog-1520302325239963360.post-11171918523962326332010-10-13T12:05:12.977-07:002010-10-13T12:05:12.977-07:00Cool idea. I also like the day before/day after ta...Cool idea. I also like the day before/day after table but I wish you had an option :-) in Livevol on the Earnings tab that could choose the DAY of the ATM Straddle ("SD").<br><br>For example, GOOG SEEMS to exhibit a bullish pattern into earnings, so the earnings tab default (starting 5-6 days before earnings)means the ATM SD is typically an ITM SD on the day of the earnings announcement. I'd love to be able to choose which day to calc the ATM SD (especially since it's comon for investors to play the earnings announcement with a short SD - or strangle or condor or...).Miles Hoffman...trial usernoreply@blogger.com