I haven't read the whole thread, but I would caution anyone using horizontal positions or anything relying upon limited movement (not volatility) in GOOG. As we caught a glimpse over the holiday break, it has no hesitation to move through a strike. Look at days when GOOG has moved through more than three strikes ... or find a month when a Straddle on GOOG would not have been profitable (assuming a reasonably durable trading plan.) F'rinstance, I can't back-test it easily on thinkorswim (maybe someone can show me?) but I've noted for some years now that I can buy a Straddle, wait for it to move through a strike, take profit off the one side and roll it vertically or horizontally either adding or subtracting contracts depending upon preset rules for risk and profit based on technical analysis of price action, especially momentum and overall market action.
On Fri, Nov 27, 2009 at 12:32 PM, bben1006 <bben1006@yahoo.com > wrote:
MC--
I did, and this is what I got with an IV of 55% - I wonder why?(I must have mistyped something…)? In any case, I think that with your Hoadley's calculator it will be very easy for you to replicate the entire comparison exercise (FSLR vs GOOG, say) — for the point I was trying to make.
Regards,
BBen> OptionClub-unsubscr
--- In OptionClub@yahoogroups.com , "mcatolico" <mcatolico@...> wrote:
>
> Why wouldn't you use an option calculator? With your parameters on goog I
> get the 630 implied value at 14.95 or so.
>
> -----Original Message-----
> From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com ] On
> Behalf Of bben1006
> Sent: Thursday, November 26, 2009 11:12 AM
> To: OptionClub@yahoogroups.com
> Subject: [TheOptionClub.com] Re: Basic Calendar Question
>
>
>
> Your best way to realize/see the differences between these stocks is to
> 'standardize' the option chain of each underlying by dividing the entire
> chain (put and call prices and the strikes all for the same month) by the
> current price of the underlying stock. The resulting standardized chains
> will illustrate to you the (nonlinear) pricing-effect of the volatility,
> giving you the relative costs of the options in relative terms to the
> percent at-the-money and out-the-money strikes.
>
> For example (all with approximate round-offs) : FSLR is currently $120.97,
> with ATM IV 55%.
> The Dec 130 call is nearly 7.5% out-of the money and has a relative price of
> 2.28% ($ 2.75/$121).
>
> Compare this to, say: GOOG, currently at $584.75, with ATM IV 22% .
> The Dec 630 call is also nearly 7.5% out-of-the money, but it has a relative
> price of only 0.22% ($1.25/$585). Note that in order to match on the FSLR
> volatility, the price of this GOOG 630 Call option should be about $13.3.
>
> You can do the rest of the calculations.
>
>
>
>
>
> --- In OptionClub@yahoogroups.com , "Peter Gum" <peter.gum@> wrote:
> >
> > Take look at the premiums on things like AMZN, GS, BLK and IBM, for
> example.
> > The absolute amounts are substantial, though I have not done the
> > money-at-risk or ROI calculations. An enlightening exercise can be to
> > compare the return on the spread with the premium on a comparably priced
> (to
> > the spread) stock. Spreads of any sort look attractive sometimes.
> >
> >
> >
> > phg
> >
> >
> >
> > -----Original Message-----
> > From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com ] On
> > Behalf Of billb_
> > Sent: Monday, November 23, 2009 9:37 AM
> > To: OptionClub@yahoogroups.com
> > Subject: [TheOptionClub.com] Re: Basic Calendar Question
> >
> >
> >
> >
> >
> > I don't understand what price has to do with any strategy to be quite
> > honest. If price of the underlying gave you an edge, wouldn't that be
> arbed
> > away?
> >
> > --- In OptionClub@yahoogro <mailto:OptionClub%40yahoogroups.com > ups.com,
> > "drrobhansen" <robhansen5252@> wrote:
> > >
> > > I had heard either during a webinar or maybe in a magazine that calendar
> > spreads are best put on with high priced stocks. Is there anyone that
> would
> > explain to me why it would be advantageous? Or maybe I'm just mixing this
> up
> > with some other strategy?
> > >
> > > Thanks,
> > > RFH
> > >
> >
>
>
>
>
> --------------------- --------- ------
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