MARY4MONEY
806 posts
msg #81206
- Ignore MARY4MONEY |
10/16/2009 10:10:29 AM
selling a strangle 20 minutes before earnings using 5-10% above and below the stocks price
( and having the options over priced by 200-600%)at that time as a basis for for your trade lets use goog s earning -was 528 20 minutes before earning-- so we sell the 580 call fro 1.05(they were 300% overpriced) it is now 0.05 for a 95% gain -at the same time you sell the 580 puts for 1.32- at the open today it was 0.05- so you make another 97% overnight---- if you did this on intc gs bac bax aa hog jpm nok ge goog ibm aos hal - you ended up with 27-28 winners with an average gain of 88% and one loser for -25%- that gives you an average gain of 86% for 28 plays in the last 8 days- its true that the option sellers win 80-90% of the time especially during earnings where the prices are really bid up during the last hour before earnings- lets say you played 1000$ on each strangle play- thats means you would of been up >12000% while only investing 1000$ per play- your gain on goog right now would be +960$ on a 1000$ play- but you have to remember your gains are proportional to how many days are left in expiration- on these big named stocks we won 96% of the time- what i will do is keep a running tab on this message for next week on earnings on stocks like aapl
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MARY4MONEY
806 posts
msg #81208
- Ignore MARY4MONEY |
10/16/2009 10:15:04 AM
there is another little trick you can do the day before earnings--you can buy the put and call and go long( in other words a 1 day strangle) at the open and sell it right before earnings too- you wont need a margin account for this-- lets use goog from yesterday the 480 put went from 0.70 to 1.32 and the 590 call went 0.25 to 0.50
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MARY4MONEY
806 posts
msg #81215
- Ignore MARY4MONEY |
10/16/2009 10:51:47 AM
you can actually sell this strangle any time-especially at the beginning of the next exp which would be nov-- aapl is at 188 now the 190 calls are 8.00 and the 190 puts are 8.80- they are overpriced by more that 100% now we can do the 10% stangle sell-- the 210 nov call and the 170 nov put are both around 2.15 now- their actual value is <0.18 so they are over valued by 900%--lets look and see what happened to the oct calls and puts on aapl using a strangle--aapl closed at 185 on the sept exp--the 200 oct calls were 2.00 and the oct 170 puts were 2.50- they are both now 0.01
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medowz
59 posts
msg #81684
- Ignore medowz |
10/24/2009 2:08:26 PM
So, you sold to open the strangles 2 days prior to options expiration as well as 20 minutes BEFORE the actual earnings reporting time. Can we assume theoretically that ALL positions were then bought back prior to the close Friday since it was October expiration Friday?
How are you calculating and/or screening for over/underpriced option with SF?
I'm looking at APPL at almost 204 on the close of Friday on TOS. The Nov 220call/190put strangle is going for 3.08-ish. My margin requirement PER contract is $2,688.05 should I sell to open this position today (which I can't since it's Saturday). Return on Margin is 308/2688.05 = 11.45%! Fantastic return, but risk exposure is huge.
I like this earnings strategy. Interesting, however should anyone carry even one loser through to expiration, you may need 10 winners to break even!
Looking forward to more plays.
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stockfetcher01
25 posts
msg #81688
- Ignore stockfetcher01 |
10/24/2009 2:28:02 PM
Mary, I am new here but I am very impressed with your postings, would mind leting me know if you are a professional trader or trade out of your home etc. keep up the good work. I hope to get as good as you. Also, it would be great if you would post a few of your filters now and again to help the new guys & gal learn. SF
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