LXK update

How to view the entire chart:


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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Here is my current position on LXK. Notice that both Vega and Theta have been helping until now. It looks like Delta is going to take over. It is important to note that the front month options have declined in volatility while the second month options have increased, creating another volatility skew from which we could benefit, reducing the cost of the trade, if we decide to stay in it.

By selling Aug. options and closing the July options we are collecting Vega profits. My risk here is the IV decline in my long options. Since LXK reports earnings in late July, The most likely scenario is that the Aug. options will continue to increase while the July options continue to decline. Therefore, there is no imminent need to do the switch until we get closer to July expiration. Remember that we are looking for a $3K profit or 30% return in our investment. The volatility moves may be unpredictable, so there is not good reason to risk such profits by holding until earnings. For now, we are fine! The stock is close to a 52w high and may break out of the trading range it has been in since we entered the trade. I think it is worth waiting a week or two. I will keep you posted.






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Here is the original post on LXK


Today LXK jumped to an 8th month high, breaking through the Bollinger band at a time when the market has been acting poorly.

It looks as though the stock will continue to rally, while the volatility is on the increase. Notice, however, that the IV for the long-term options are only slightly below the IV for the short-term options and that they are both below 40%. Looking back a couple of years in the IV chart, looks like it could go up quite a bit and give us some Vega gains.

Here is the resulting risk graph with my actual fill prices:



Note the slight difference between longs and shorts in their I.V. In the chart below is the Interactive broker's execution. It is good to have IB to fill my trades as a unit.






What do you all think?