I did it today, was watching the option prices all day and they didn't move nearly as much as the stock itself. No congrats are in order, looks like I won't make much if any. Was down 11% and below, now down only 5%.
I did it today, was watching the option prices all day and they didn't move nearly as much as the stock itself. No congrats are in order, looks like I won't make much if any. Was down 11% and below, now down only 5%.
I learned a good lesson learned on the impossibility of profit from aftermarket moves. Have to keep this in mind when I trade weekly's in the future.
I've tried weekly's before, but never made money. How do people make money with weekly's?
I dunno, but I'm hoping I get lucky and Groupon opens at about $20 tomorrow.
No real reason it shouldn't shed the gains it has made in the run-up to the quarter.
Thanks, Causalien.Originally Posted by Causalien
Ya, I know. It's expensive. The reason that I did it on Friday, is because that was my only day off work. On a normal workday, I can't find a moment to 'sneak' in a trade.
I just did some analysis of the volatility.
It looked like historic volatility dropped while short term implied rised by 20% from January 30 to earnings in expectation of the release. The short term says that you need a 12% drop for weekly's to make money. So anything below $22 is needed. What I am mostly surprised of, is the fact that there's almost no time decay until earnings. I guess the decay is offset by volatility buildup.
The market makers that entered the options trade 1 hour before close, doing strangles are insured from a 24% move either way. The fact that they managed to move the option price and make it touch both the top and bottom of the bollinger band during the high volume hours is really suspicious.
Conclusion. 5 min 20 tick SMA bollinger band is your friend in weeklys
Last edited by Causalien; 2012-02-08 at 05:27 PM.
Hey Argo, I'm glad you joined me on this trade.
I'll see tomorrow how profitable it was.
yay.
groupon loss weak sales clobber shares
Shares are indeed getting clobbered. Looks like it will be a good day tomorrow. What does one think I should do with my 100 shares? Sell calls on it until it disappears.. or just sell it?
Don't hold the stock.
Local has been tried and died so many time before that I am amazed at how much smoke and mirror gets overlooked at Groupon. Eventually it'll die for 2 reasons.
Competition and inability to scale. It is not tech because it lacks the inability to scale and it doesn't have the high margin that tech usually commands, but somehow it is currently being treated as a tech stock.
My groupon offerings for the area I am in has recently turned into a bunch of cheap hotel stays or restaurants without any flair and requires driving for a long time. Nothing that I want, which indicates that the good business are staying away.
Last edited by Causalien; 2012-02-08 at 05:53 PM.
argo as i recall you hold 3 puts - ie leverage on 300 sh - so if the clobbering is good enough you should be able to sell puts & sell 100 sh & end up with a profit.
a bit like equityval with his short-trp-long-enbridge pair. The return is not as good, but the risk is so so so much less.
plus someone like yourself is no doubt able to dance in & out tomorrow ... selling P in a plunging flurry (selling them is the priority) plus selling sh on bit of an uptick.
only real drawback i can imagine is if you have to work during the day tomorrow.
in a partly worse scenario - you've sold the puts but had no chance to sell the shares at a price you like, so at the end of tomorrow you are still the proud owner - history suggests that any kneejerk fall will smooth itself somewhat in days to follow. Which means, Study tonight's grpn news release to interpret what they are really saying. What future lights are they eyeing, what solace can there be for the longs. Your takeaway from interpreting tonight's news will affect how aggressively you will be seeking to sell the 100 sh tomorrow.
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