From the analysis I did yesterday on companies announcing earnings, I decided to trade Green Mountain Coffee Roasters (GMCR). Near the close it was trading around 53 so I sold the 55 strangle. Lately, I have been selling May and buying a later month’s options at the wings to protect against large moves. Yesterday, I thought that the May options were so wide that the later months would kill me in the bid ask spread. So I didn’t buy the out month.
Boy, was that a mistake!
GMCR went from 53 at the close yesterday to 73 now (2 PM). So my short straddles are deep underwater.
The writer of the Daily Option Report traded FSLR with an iron butterfly and limited his loss.
Stocks often go nowhere for a while, then change their state and trade at a whole new level. The reason commodoties seem so much more volatile is because of the leverage.
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