Okay just got filled on a put BWB on GOOG with the strikes 470/460/440. Rushed the trade a bit and got filled for $0.17 credit. I have to say it's not a trade that I feel 100% happy about as I'm only taking in 0.17credit for $10 of risk but this is one of those trades where it's more like a lottery ticket then anything else. If GOOG has better than expected earnings and takes off then I lose nothing, if the earnings comes out as expected and GOOG does nothing than I have a chance if GOOG just grinds it's way towards the long strike at 470 before the end of Friday. If GOOG has a disastrous earnings (which I don't think it will) then I will be in the dog house. Implied vol is still fairly high so I'm hoping for a bit of volatility drop after the announcement. Let's see how it works out.
very interesting trade. as google is currently at 490 so id thought you'd put it slightly higher. do you find it any problem with such wide bid/ask?
ReplyDeleteML
Hi ML,
ReplyDeleteIn line with my earnings strategy that I posted earlier, I like to keep my B/E outside of the one standard deviation expected move just in case the worst case scenario happens. As we all know now, that scenario came to fruition last night as the rest of the market tanked.
With regards to the wide/bid ask, I didn't find it to be that bad so long as I got filled for a credit. Mid point was fluctuating around $0.37 to $0.21 so I thought I'd lowball my price so that I would get filled (sometimes I get impatient when I've got capital to utilise and I see a half decent trade - one of my weaknesses!)