1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
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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The stock price have moved sideways but the Theta gains have not materialized. With only a week to go to expiration, this trade should have experienced some gains by now.
Volatility in the front month options is out of proportion with the Second and back month options. This has caused the "bulging out" configuration in the risk graph. Take a look at the chart below, the IV for April is rather high. This kind of spike is usually associated with earnings which are to occur after the market close. Pay close attention to the volatility tomorrow, LRCX reports AFTER the close today....
4 comments:
Juan,
What we are after then is a volatility collapse in the front month. Unless the enormous skew caused by the front month, signifies a huge jump.... As Alex Mendoza would say, 'Tomorrows news today.'
Yes, that is correct. Expect the front month IV to decline (so will our long month IV). We have Theta on our side, as long as we hold the April shorts. However, seeing that the stock is up +2.08 after hours, the thing to do will be a rollover, to allow Delta to work for us. In a day or two the second month IV will be higher than the front mont IV.
Anyway, we shall see tomorrow. Just remember, high IV means expensive.
Juan,
I have just done the rollovers;
LRCX for a $1.40 credit
DNA for a $0.60 credit.
SBUX for a $0.60 credit.
Juan I note your comments;
“I have to see if LRCX will go higher. Right now the volatility of the April is higher than the May. The stock is still within range of making money sideways. I might decide closing the position. There is also an alternative with the calls, if the stock continues to rally. That is to close the short calls (all of them) and sell an equal or higher number of long calls, leaving only long calls, but it all depends on how the charts look next week.
I have not done much with DNA. I don't think it is making a bottom here. I run the risk of being assigned with the short puts (not that I care much), I could do the opposite to what I suggested to do with LRCX. That is to close the short puts and equal or larger number of long puts. This depends on the resulting risk chart.”
Perhaps we should have got out both DNA and LRCX during the last rollover? However, I am interested in seeing how this trade develops. This must be the last rollover now surely? Unless of course we roll the back month to Sept?
**Smiles** Just kidding you.
Juan,
Did you eventually exit LRCX?
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