I think the fib retracement at 50% vs market open low is a good point to sell the shares.
I think the fib retracement at 50% vs market open low is a good point to sell the shares.
Causalien, thanks for your analysis.Originally Posted by Causalien
This was my first option of the 'weekly' variety.
I guess, because it was Groupon, the volatility was huge, hence the puts that I bought on Friday were fairly expensive.
Caus, humble,
My breakeven point at expiry for the underlying would be $22.45 (I bought 8 contracts of the $24 put at $1.55). For example, if the stock is around $21 tomorrow, my profit, after initial investment, will be somewhere around $1160. Hey, that's almost a 100% profit over my initial $1240 investment. That's excellent. Still, for the amount that Groupon has dropped tonight (14%), I was hoping the profit was a little more.
I'll need to try to logon tomorrow at work and sell this put as soon as I can, to secure my profit.
My option selections are always uni-directional. In this case, my bias for Groupon was in the downward direction, so I bought a put.
My other 'option' was to sell a bunch of call options, to also take advantage of that big volatility premium. But then I would have been at risk to unlimited losses if Groupon 'took off' with positive earnings.
In any case, I am very happywith today's outcome.
Sighhhh... Why did I not do it... Avrex man, why you gotta make me doubt myself :PHmm, I think I might take a stab at GRPN puts as well
The bear side seems to be much easier to play than the bull side with quarters. I've played four, and the three winners (RIMM, NFLX, GRPN) have been puts while the loser (LULU) was calls. Is this coincidence or the way it is? Perhaps when Mark Knopfler said Money For Nothing this is what he meant.
Anyone interested in LinkedIn tomorrow?
haha.
Check out the last post (on Jan 31st) on the LinkedIn (LNKD) thread.
Of course, I'm tempted.
You bought NFLX put at earnings?
Back in the fall when it crashed. Avoided the recent one where it had a big jump.
do all remember atrpdoc's classic put squeeze in apple. As i recall he sold an atm weekly put shortly before earnings & also bought a 2-3 month otm put.
stk rose in the usual pre-earnings hype so the weekly expired without assignment & he got to keep the premium as profit.
then stk fell in the usual post earnings disappointment so his cheap otm put came into the money & he sold it for another profit.
what the pro traders never do as far as i understand - but what newbies often believe in - is to put on a long straddle just before earnings. The premiums will be so high that the probability the straddle will exceed the premiums is just about zero. As all have noted in this thread, the put premiums in grpn weeklies didn't decline as time value approached expiration. Same thing for the calls. There is usually enuf earnings hype to keep em up.
there are option traders who methodically work this phenomenon like roman soldiers. Not straddles. Not simple monodirectional bets. With 4-legged condors or flies. Not in cmf forum. Maybe find em some place like elitetrader dot com.
I took a look at GRPN chart...looks like it has strong support in $20 area...
The market maker won't let it fall more than 24% before Friday expiration due to the strangle they employed.
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