Option Trading Articles: re: [TheOptionClub.com] Re: Stangle on Rimm

Sunday, May 31, 2009

re: [TheOptionClub.com] Re: Stangle on Rimm

I never as a rule not buying long options with less then 45-90 days.
I do need movement and to belive that the stock can gain intrinsic value as the debit that I am paying.
But regarding to Vega/theta what is this ratio tells me?

Nava

From: "karensoich" <mcatolico@mindspring.com>
Sent: Sunday, May 31, 2009 5:31 AM
To: OptionClub@yahoogroups.com
Subject: [TheOptionClub.com] Re: Stangle on Rimm

if you are doing this as an earnings play i would suggest you trade the month the earnings come out. if you believe that whatever happens after earnings will start a trend that you want to be in, i would wait until earnings are announced and then pounce on the direction you want to lean the trade with a vertical or other directional strategy.

you ask about the greeks. well the obvious risk is vega/theta. whatever happens after earnings are released, rimm iv will likely fall - particularly in those july or sep options - and thus you have to get enough big directional movement to compensate for the debit on the strangle (especially if you decide to play june expiration, as i suggest, which would expire immediately after earnings). so you have to be prepared to either have your fortune telling skills perfect (i.e. you guess correctly on a big post earnings move) or you have to be an aggressive seller of premium on pre-earnings opportunities or directly into any post earnings move.

--- In OptionClub@yahoogroups.com, "nava_elgar" <nava@...> wrote:
>
> Hello all,
>
> I am considering a trade on RIMM b4 earning .
> Rimm has earning June 18.
>
> I thought about on 80/75 Sep cost 16.75$ debit or to go on July same strike cost 11.15$ .
>
> my question:
>
> I don't look at greek so all the greek export here what do you think?
> I want to learn.
>
>
> when I am placing this kind of trade .I am just checking if the stock can move that far to make me profit.
>
> Nava Elgar
>

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