mrdanpearce
04-27-2008, 02:42 PM
The way I see it, there are two excellent buying opportunities at
Market Open on Monday.
AAPL options IV has dropped down around 35%, this is ridiculously low
for AAPL options (ATM). Sometime between Monday and Wednesday we
should see a correction to 40-50%.
X (US Steel) options IV has dropped down around 47-48% at the close.
They report earnings on Tuesday, and IV is down! That means Monday the
IV on X should shoot up like a rocket, probably 10-20% that same day.
The fact that there was a small buying frenzy for X OTM options one
minute before close today is a great sign that Monday will just go
higher and higher (on IV) all day long. After all, this is exactly
what happened with AAPL options one minute before close last Friday.
I'd strangle this one up folks. I wouldn't be surprised if the
strangles end up with 25-40% gains on Monday just like AAPL last
Monday (I made about 38% and sold the same day). First thing Monday
morning should be a great time to get in as IV will probably drop
slightly as people decide what they want to do.
Either way, AAPL or X, strangles at the open is my hunch. I think AAPL
will take a couple more days to raise though, but who knows. The IV
charts certainly give it a few more days in past earnings.
My play is:
Strangle #1: X May 155 Call, X May 145 Put (27 contracts on each
side).
Strangle #2: X May 160 Call, X May 140 Put (67 contracts on each
side).
Market Open on Monday.
AAPL options IV has dropped down around 35%, this is ridiculously low
for AAPL options (ATM). Sometime between Monday and Wednesday we
should see a correction to 40-50%.
X (US Steel) options IV has dropped down around 47-48% at the close.
They report earnings on Tuesday, and IV is down! That means Monday the
IV on X should shoot up like a rocket, probably 10-20% that same day.
The fact that there was a small buying frenzy for X OTM options one
minute before close today is a great sign that Monday will just go
higher and higher (on IV) all day long. After all, this is exactly
what happened with AAPL options one minute before close last Friday.
I'd strangle this one up folks. I wouldn't be surprised if the
strangles end up with 25-40% gains on Monday just like AAPL last
Monday (I made about 38% and sold the same day). First thing Monday
morning should be a great time to get in as IV will probably drop
slightly as people decide what they want to do.
Either way, AAPL or X, strangles at the open is my hunch. I think AAPL
will take a couple more days to raise though, but who knows. The IV
charts certainly give it a few more days in past earnings.
My play is:
Strangle #1: X May 155 Call, X May 145 Put (27 contracts on each
side).
Strangle #2: X May 160 Call, X May 140 Put (67 contracts on each
side).