First, thanks for nothing Bernanke, because we didn’t know. You had to spell it out. Second, I remember times when AAPL reporting stellar earnings generated $30-$40 pops. Third, volatility crush was huge, I just bought more August calls for less they were BEFORE the earnings. Yesterday when AAPL was at 240 you could get AUG 280 for 2.30. Today you could get AUG 280 for 2.30 when AAPL was at 260!. I got them at 1.80 AFTER the earnings. As I mentioned in earnings thread, this volatility crush isn’t as strong when playing earnings with bull call spreads as short leg of bull call spread offsets the crush. We are talking here about very close to expiration options. Further away your options are lower the volatility crush is. On the good side, we punched through 263 and popped there at the open. Too bad we could not close above it. Rest of the week is still heavy on earnings, so that will determine where the market will go. If earnings are good, market will forget about Bernanke in about 3 days. That schmuck spoiled my day today.
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Ahhnold 6:42 pm on July 21, 2010 564 days ago Reply
Agreed about Bernanke…ruined my day!
So after looking up the volatility crush and IV for options (“binged it”…lol nicu), it makes much more sense what happened. So I’m guessing since you averaged down a bit by buying more AUG 280 calls that we will get a volatility ‘rush’ soon? I’m in the same boat with the calls. Pretty dissapointed over all
Ahhnold 6:43 pm on July 21, 2010 564 days ago Reply
I meant, do you think we will get a volatility rush soon…not “we will”.
There a way to edit your own posts on this forum?
conshmillo 5:49 am on July 22, 2010 564 days ago Reply
@ahhnold
Volatility crush is result of great expectations where option prices get inflated in anticipation of some event. Then, after the event, inflated price collapses and gets closer to “normal” levels. Only what could get IV higher is if Jobs announced some earth shattering event prior to expiration date. Playing ATM bull call spreads instead of plain vanilla calls seems to be good weapon against volatility crush throughout the earnings. I though there wouldn’t be that big IV crush this time around because AAPL stock was so beaten down with all the negative publicity. I was wrong.
Unfortunately there is no such a thing as volatility rush, although I could use one right now
rastard 11:11 pm on July 21, 2010 564 days ago Reply
Seriously. Great earnings and guidance, and AAPL closes the next day at only +$2.35? Disappointing…
conshmillo 5:35 am on July 22, 2010 564 days ago Reply
Shanghai, London not buying it. Shanghai closed up +1.07%. London up at the moment +0.52%. Futures up (/ES +13 @1077). There is a good chance of bounce back in the morning. Apple up in pre-market +2.93 @257.17.
nolavabo 9:20 am on July 22, 2010 564 days ago Reply
The closest thing to an IV ramp or rush or spike or whatever would be in the last few days before an earnings report, a WWDC event or a press announcement. In order for there to be IV crush after an event, it needs to be higher than usual before it.
However, IV crush is an instant thing, while IV rising up is more gradual.
Ahhnold 6:10 pm on July 28, 2010 557 days ago Reply
Hey consch, still holding onto your aug 280 calls? I’m still debating whether I should hold or sell for a loss the 290s. Even if apple does reach 270 or higher soon with good news this week, I think the time decay will kill me regardless. I was thinking of rolling them into sept 280′s instead. What’s your strategy?
conshmillo 6:53 pm on July 28, 2010 557 days ago Reply
@ahhnold
have you received my email?
Ahhnold 10:46 am on July 30, 2010 556 days ago Reply
Hey con,
Yea got your email. Thanks for the quick reply. I was just doing a follow up to see if your strategy had changed since. Now that apple is below the 260 mark again, I don’t believe it’s worth it to me at least to hold onto my aug 290′s because of time decay. What are your thoughts? I know time decay greatly affects one to two months out options but do you know when it drops to the point of no return with out of the money options? I’ve experienced it being around 2 weeks before exp.
Nicu 11:15 am on July 30, 2010 556 days ago Reply
Aug $290 options are only $.3 now, does it really worth selling them ? I mean, if you don’t have 100 of them, you only get $30 per option minus fees, nu much left
I would keep it, there are 3 weeks left and you never know; maybe they announce figures for iPads or iPhones 4, al least the iPad may be at 1,5M-2M / month by now with the extra countries … or simply the whole market may turn green in a week or two and then AAPL may spike.
All this reasoning is because you get only few $ per option, I have no more insight than that
Nicu 11:16 am on July 30, 2010 556 days ago Reply
not much left I mean
Ahhnold 11:43 am on July 30, 2010 556 days ago Reply
Thanks for the insight nicu, that makes sense. Your right about the fees, forgot about those!
conshmillo 12:23 pm on July 30, 2010 556 days ago Reply
As Nicu said, there is not much value left in them. When you are buying options that close to expiration and that far out, usually price of the options is your stop loss. I usually do not set any stop loss on options that are one month out. It’s a averages game. You watch technicals to line up, wait for over reactions and so on and then when you are convinced situation is right enter the trade. I don’t wait for expiration either. I don’t look to make huge gains on close to expiration OTM options. You take 20-30% profit on them and look for another setup. 20-30% may look huge but it isn’t, because it is game of averages. When you lose 2 out five setups 20-30% will become 5-10%. (Only time you set stops on close to expiration options is when you day trade them in larger quantities)
If AAPL can break out of 266 next week I believe 280 may still become even or slightly profitable by the expiration. There are still 21 days left. I think 290 are lost at this point.
Ahhnold 4:54 pm on August 3, 2010 551 days ago Reply
I ended up selling my aug 290 calls last week for .25
Kinda blows is an understatement but seeing that they are only worth .18 at the moment, looks like I made a good call. Good learning experience this round even with the big loss. Thanks for the insight guys
Nicu 5:08 pm on August 3, 2010 551 days ago Reply
@ahhnold
I’m in Aug $260 calls for more than $25k, pretty huge mistake, as I am at about 50-60% of that value now – I still hope at least to get even but I may avoid waiting until the last week
I’ll post my trades as usual