6 replies to this topic

[NAV]

Will probably open around 639-40 tommorow. Reasoning is simple. It's earnings this time was just one day prior to the expiration. Those folks who wrote out of money Oct options would get killed if it opens 30-40 points above or below today's close. Those writers are not stupid to give away easy money. Guess what, the implied volatility on Oct options were something like 140%. If Goog opens tommrow around the 639 area, the implied vol would collapse to around 30-40% level. The option writers would cover their positions at the open and laugh their way to the bank. There's no easy money in the markets !!!!

Edited by NAV, 18 October 2007 - 03:39 PM.

[tommyt]

bingo NAV...i've been posting about selling Goog call spreads before the number cause the implied was sky high, like rimm over a week ago...option buyers paid a very rich price to participate in the upside. I sold a bunch of oct call spreads, and hopefully will be smiling.

[saltlake]

The boys are really trying to hold it down tonight. Looks like I might lose some on my oct calls. Me think goog still trades around 700-750 by the first of the year. Also check out Isrg, my last buy was in the 220s per my post about a month ago. This one gos over 300.

[bighouse1006]

Wasn't earnings last quarter the day before expiration? That was a pretty large gap down that Friday of expiration. I'm sure the implied volatility was large that day also. The guys who sold puts couldn't have been too happy. What I'm trying to ask is how does anyone know what a stock will do based on its implied volatility?

[tommyt]

What I'm trying to ask is how does anyone know what a stock will do based on its implied volatility? You don't know...what you do know is when the implied vol is as high as it was this week in GOOG, the day after earnings the puts and calls will all be smashed. If Goog gaps up or down 10-20pts, most out of the money options will be down, calls and puts. Look at SNDK implied today...sky high and option smash tomorrow. Aapl is next on Monday, with very high implied..Its not like its a LOCK to work, but pretty close. An earnings miss and huge gap down is one example of when it doesn't work as well.

Edited by tommyt, 18 October 2007 - 09:37 PM.

[thespookyone]

Goog closes at 630 Friday, My FF.

[tommyt]

[quote name='thespookyone' date='Oct 18 2007, 08:03 PM' post='322420']
Goog closes at 630 Friday, My FF.


Looking at Goog Oct calls today(open int + trading volume today), which expire tomorrow, the Oct 670's look to be the biggest open interest...so if Goog is up it almost surely not going above there. The Oct 650's calls are next, so if the stock open below 645-650, they will start coming in for sale in a big way and put pressure on the stock by marketmakers. I didn't see anything about a split, so without that and the huge expectation going into it, it will be heavy.