Thank you for taking the effort to put the video on. However, I had problems viewing your video as I did your previous videos; it kept stopping.I followed your instructions as previously. Not sure why. Do you have any suggestions?
Mary, the video is a streaming video, so the capacity of you hard drive and the processor in your PC may be the limiting factor.
A streaming video is slowly downloaded into your hard drive and displayed. It may stopped in the process if the capacity and power of your computer is exceeded.
I would recommend that you go to your local Apple store and run the video. It is very easy to do with a Mac, any Mac. In the Apple Store they will have the fastest possible connection to the internet.
Wonder if there is an Apple Store near you? find it here: http://www.apple.com/retail/
I have been following your blogs for some time now with a great interest in the way you trade pccrcs. A few months ago I placed a few of these trades of my own a few days after earnings on stocks like ebay, yhoo, and amzn.
During the last quarter these stocks traded sideways and I made a slight profit through theta. I was expecting vega to do more since I was intending to buy after earnings at the low (which it accurately was) and hold/roll till close to the next earnings. The problem I discovered was that the only longs I could buy at the time that covered the next earnings were about 150 days out. As time went by, the volatility of my longs did not really increase. I would really appreciate any imput on how you decide which longs to purchase, because I feel like you must only purchase longs that corrospond exactly with the next earnings release to recieve the greatest spike in volatilty. Do you not usually trade earnings to earnings? And if you do buy longs a month or so past earnings, do you roll your shorts to the earnings month itself at the appropriate time?
Thank you for all the effort you put into your blogs, any help on this matter would be greatly appreciated.
Eric, ideally, you'd like the long position to be at least 3 months out. Earnings/expiration coincidence varies, so you may not get what you want.
Let's take GOOG as an example... The company reports today, and expiration is tomorrow. This means that right at the opening you may have a strong move in either direction and either short may become nearly worthless while the other may jump in price. At that point, the volatility drops or you may simply be assigned. Thus, it is better to rollover the shorts to next month, or simply close the position if it is profitable, and look to open a new one AFTER earnings.
If you are expecting GOOG to jump after earnings, then the rollover may be a good idea, but keep in mind that second month options will decline in volatility. If you wait until volatility decline and the company does report good earnings, then you will have the justification to enter a new position at a higher strike price.
So If I was to time my PCCRC to earnings, and assuming that GOOG jumps 10% tomorrow, then, we need to look at the options available and the next report date.
GOOG has MAY, JUN and SEP options.
The next reporting date is mid July. Very close to expiration, I would think, just like this one.
IV will increase close to JULY expiration, but there are no July or August options. In fact, the July options would be useless because I would not hold them until expiration, since I do not trade straddles (that is a different strategy altogether).
If they were available, the Aug. options would be the best because they would be the cheapest (timewise) among the options expiring after July earnings. So, in this case, we only have Sept. as a possible tradeable expiration.
Then, let's say you are ready to place the trade tomorrow. Here again, you MUST pay close attention to the volatility. You want to sell HIGH IV and buy LOW IV. If the Sept options are below 40% (they already are btw), and the May options are higher in IV than the Sept options then you have a good possible trade.
Expect earnings to favor the IV of expiring options, but also the second and third month options to some degree. You don't want to be long options that are expiring, just before earnings. So the trader that uses straddles before earnings, must consider exiting the trade before the IV is sucked out of the options by the earnings report.
Eric said: And if you do buy longs a month or so past earnings, do you roll your shorts to the earnings month itself at the appropriate time?
Eric, if you picked the stock correctly, chances are that the stock price will make its move before the next earnings. Don't be shy about taking your profits early. The idea is to profit in the shortest period of time, you don't have to wait until earnings, just because you think IV will increase by then. You can take DELTA, VEGA and THETA profits. Let's say you enter the trade in a stock that is trading at $40/share. Then it jumps to $50, and you have a good profit... What would be the point of waiting until earnings? exit when you have a gain, whether it comes from Delta, Vega or Theta.
I would avoid trading indexed options using the PCCRC strategy because this is based on IV changes, and the hope for a strong and sudden move in either direction. You are not likely to get that with indexed options.
great i am using TOS too. how does the graph look liked? i don't use platinum but only TOS, TC2000, and Ivolatity to check the IV. When is the best time to adjust or roll the short straddle? currently i am holding HOS HOS 7 May 07 PCCRC at 35 strike
13 comments:
Juan,
Thank you for taking the effort to put the video on. However, I had problems viewing your video as I did your previous videos; it kept stopping.I followed your instructions as previously. Not sure why. Do you have any suggestions?
Thanks,
Mary
Mary, the video is a streaming video, so the capacity of you hard drive and the processor in your PC may be the limiting factor.
A streaming video is slowly downloaded into your hard drive and displayed. It may stopped in the process if the capacity and power of your computer is exceeded.
I would recommend that you go to your local Apple store and run the video. It is very easy to do with a Mac, any Mac. In the Apple Store they will have the fastest possible connection to the internet.
Wonder if there is an Apple Store near you? find it here:
http://www.apple.com/retail/
Good luck.
Thanks Juan, I will try running it again with all programs closed so that it has maximum capacity.
Regards,
Mary
Juan,
The trade on GOOG is going to be interesting long term.
So far, it has not done well, but I expect a big move soon.
I have been following your blogs for some time now with a great interest in the way you trade pccrcs. A few months ago I placed a few of these trades of my own a few days after earnings on stocks like ebay, yhoo, and amzn.
During the last quarter these stocks traded sideways and I made a slight profit through theta. I was expecting vega to do more since I was intending to buy after earnings at the low (which it accurately was) and hold/roll till close to the next earnings. The problem I discovered was that the only longs I could buy at the time that covered the next earnings were about 150 days out. As time went by, the volatility of my longs did not really increase. I would really appreciate any imput on how you decide which longs to purchase, because I feel like you must only purchase longs that corrospond exactly with the next earnings release to recieve the greatest spike in volatilty. Do you not usually trade earnings to earnings? And if you do buy longs a month or so past earnings, do you roll your shorts to the earnings month itself at the appropriate time?
Thank you for all the effort you put into your blogs, any help on this matter would be greatly appreciated.
-Eric
Eric, ideally, you'd like the long position to be at least 3 months out. Earnings/expiration coincidence varies, so you may not get what you want.
Let's take GOOG as an example... The company reports today, and expiration is tomorrow. This means that right at the opening you may have a strong move in either direction and either short may become nearly worthless while the other may jump in price. At that point, the volatility drops or you may simply be assigned. Thus, it is better to rollover the shorts to next month, or simply close the position if it is profitable, and look to open a new one AFTER earnings.
If you are expecting GOOG to jump after earnings, then the rollover may be a good idea, but keep in mind that second month options will decline in volatility. If you wait until volatility decline and the company does report good earnings, then you will have the justification to enter a new position at a higher strike price.
So If I was to time my PCCRC to earnings, and assuming that GOOG jumps 10% tomorrow, then, we need to look at the options available and the next report date.
GOOG has MAY, JUN and SEP options.
The next reporting date is mid July. Very close to expiration, I would think, just like this one.
IV will increase close to JULY expiration, but there are no July or August options. In fact, the July options would be useless because I would not hold them until expiration, since I do not trade straddles (that is a different strategy altogether).
If they were available, the Aug. options would be the best because they would be the cheapest (timewise) among the options expiring after July earnings. So, in this case, we only have Sept. as a possible tradeable expiration.
Then, let's say you are ready to place the trade tomorrow. Here again, you MUST pay close attention to the volatility. You want to sell HIGH IV and buy LOW IV. If the Sept options are below 40% (they already are btw), and the May options are higher in IV than the Sept options then you have a good possible trade.
Expect earnings to favor the IV of expiring options, but also the second and third month options to some degree. You don't want to be long options that are expiring, just before earnings. So the trader that uses straddles before earnings, must consider exiting the trade before the IV is sucked out of the options by the earnings report.
Eric said: And if you do buy longs a month or so past earnings, do you roll your shorts to the earnings month itself at the appropriate time?
Eric, if you picked the stock correctly, chances are that the stock price will make its move before the next earnings. Don't be shy about taking your profits early. The idea is to profit in the shortest period of time, you don't have to wait until earnings, just because you think IV will increase by then. You can take DELTA, VEGA and THETA profits. Let's say you enter the trade in a stock that is trading at $40/share. Then it jumps to $50, and you have a good profit... What would be the point of waiting until earnings? exit when you have a gain, whether it comes from Delta, Vega or Theta.
Hi,
Can we use PCCRC on index option?
Regards,
Happy Trading
I would avoid trading indexed options using the PCCRC strategy because this is based on IV changes, and the hope for a strong and sudden move in either direction. You are not likely to get that with indexed options.
Hi Juan, I hope you continue to post on this blog. Your videos are priceless information.
Cheers,
AG
great
i am using TOS too. how does the graph look liked? i don't use platinum but only TOS, TC2000, and Ivolatity to check the IV.
When is the best time to adjust or roll the short straddle?
currently i am holding HOS
HOS 7 May 07 PCCRC at 35 strike
Happy, please refer to my recent post
http://stockoftheday.blogspot.com/
You'll see the trade that is in place.
Today's rally on GOOG has complicated the fill....
I might change the strike price.
Happy, I will take a look at your HOS trade, assuming that you filled at market, unless you tell us how much you paid for it.
Juan
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