2. Try right click on the chart itself and open it on a separate window.
I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.
I Hope this helps,
Juan
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For those of you interested in entering or considering a PCCRC, here is a list I selected based on 90 day high fliers. All with >1M shares/day and greater than $35/share.
A AAPL ACI AMLN AOC ESRX FCX FTO GOOG GP GRP HNT ISRG LRCX MNST MRVL NVDA PBR PD RIO SLAB SNDK TEVA THE UPL VAR VPI
Out of that list, I have selected out candidates that either have:
1. IV>40%
2. long term IV > near term IV
3. IV NOT at the low portion of its range
The list have been reduced to:
GRP HNT LRCX NVDA PBR PD RIO SLAB VPI
Then I look at the IV/SV ratio using the 7-149 day IV and the 6 day SV. I am excluding stocks with a ratio higher than one. My list is now reduced to these:
GRP LRCX NVDA
Here are the 3 resulting risk graphs. ¿Which one would you think is the best? ¿Why? hint: look at the IV chart.
4 comments:
I like NVDa as its IV is more predictable. It tends to spike up every 3 months, coinciding with earning release.
However, I am not too sure whether it is time to enter the trade as the current IV of its Mar options are above 40.
Great HK....
NVDA reports in mid Feb, according to Earnigns.com, or at least they did this year. What that means is that the IV for March calls would tend to increase and not decrease as we move closer to the event. These are the options to buy, because they will increase in value. Meanwhile the front month options will tend to decrease in value as they approach expiration. We can monitor this trade and look for any decline on the IV below 40.
Meanwhile, LRCX offers the better fit to the conditions I have described for the PCCRC. The IV/SV is below 1 and all IV's in the trade are below 40. This may be the trade to pick. Enter the two trades in the platinum site and wait for a better profile.
Yes, LRCX is a better fit. The Mar IV is at 37%. When do you think is a good time to enter. When IV drops to around 35% ?
Dec. expiration on the AAPL pccrc is getting near. There is still no IV spike on the Jan options although it has risen recently. Does it usually spike next week ?
The IV chart shows that the earning month IV tend to increase to between 50 and 55% range at expiration week of the month before earning release. The IV then continues to increase to above 60 just before earning announcement.
Would you close the whole trade next week once IV goes above 50 ? If there is no IV spike next week would you still close the whole trade ?
I have exited the AAPL trade as of yesterday. The Candlestick pattern is bearish now, and I pressume that there is not going to be any spike in volatility before January. I will consider another PCCRC on AAPL as it moves sideways to the end of the holidays. I will enter a April/Jan PCCRC then, and only when IV is lower.
In the case of AAPL we benefitted from DELTA, not so much from Vega.
AOC is doing well too, driven by Theta. I will discuss the 3 trades in a video soon.
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