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Hi!
Am I missing something here. I realize
that it is late and I am sleepy, but something just doesn't seem right.
Either I am looking at things all wrong due to the hour or the world has gone
nuts.
GOOG is coming out with earnings. The stock
is at 399 according to my screen. The 400 straddle can be sold for 26.50
based upon bid/bid. The 380 put is selling for 6.30 and the 420 call is
selling for 4.70 or a total of 11 dollars.
You can sell that butterfly for a 15
credit right now. If they are right and the stock does move 26 what should
that outside combination be worth. If nothing else what are the trading
opportunities for trading the 410, 400, and 390 calls and puts while long the
outside combination. With the anticipated volatility can the straddle be sold
for 31 plus and a zero risk situation. Can the box be sold for 51+.
that is if the outside combination is bought for 11.
Right now the stock is trapped between 360 and 430.
Plenty of trading range. I have interim support at 385 and interim resistance at
420. I have an ultimate upside target of 480 and an ultimate downside
target of 309 at this time. There are intermediate price objectives that
could act as support and resistance.
The question is will the earnings report produce
the volatility necessary to obtain the results they think might be
possible. The really interesting thing is that the volatility of GOOG
is 24.15 and the implied volatility for the options is in the 80s. So
should you sell the straddle or the outside combination with only 2 trading days
left?
A conundrum for a sleepyhead.
Ah! What a dilemma. Have a good trading day. Ira.
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