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Google Inc. Message Board

  • bigplay08 bigplay08 Jul 13, 2011 4:36 PM Flag

    How I plan to play Google earnings

    Premiums are too high. Doesnt make sense to buy a straddle. I plan to buy 40 calls and 40 puts that expire in september, each far out of the money. If the stock moves big I make some money. If it doesnt move I still have 2 months for it to go somewhere. I then plan to wait until the premiums have dropped on Friday, figure out which direction the stock is going to move in, then buy a crapload of either July puts are calls for a much cheaper price. Even a move of only 10 dollars during the day on Friday will make quite a bit of money. And I'm thinking this will go one direction or the other. If it doesn't move at all, I will do nothing on Friday.


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    • Regardless of the test, listen to Phoenix - he's 100% correct

      That said, so long as you understand that what you're doing is fundamentally GAMBLING, rather than INVESTING, and you understand the difference between the two - well, it's your money

      GOOG is a nasty beast after earnings. The vast majority of contracts will expire worthless; those that don't will drop in price significantly. Unless you're either quite lucky or have a crystal ball to pin GOOG on Friday, I'd watch what happens on this one, do some homework, and perhaps play the game on another big mover (I'd suggest priceline, but linkedin would be a good one too)

      Good luck

    • OK... I was looking at July 22 weekly calls that came out today.

      15 points out of the money from $540 are the 555 calls going for $8.50...

      Im a normal week without earnings than start at $1.00

    • So if I play 2.00 for an out of the money sept contract, what do you think it'll be worth tomorrow if the stock didnt move? 0.25?

    • You have to understand that the options are priced to comprehend a big move. There's a lot of liquidity in google options so they are efficiently priced. So you could get a big move and still lose. If you do it I hope you win big. Don't want to tell you not to, because I would hate for you not to do it and you would've won big. But just limit the number of contracts.

    • well f@#$ it, I can't get my software to work, so I can't do that test for you, this has been a crappy day. I'm done.

    • I am not assuming that, I'm not assuming anything except that you haven't done enough homework to be risking the money you are talking about risking.

      You say you believe options are too expensive for July. Then why aren't you selling them instead of considering buying? If you believe options are overpriced, you sell them. You have no fundamental view, you have no view on the level of volatility, you don't know the move the options are currently pricing in, you don't have an opinion or knowledge of what the decay coupled with expiration will do, you have no experience with options....and you want to trade 80 contracts....on GOOG...and you must, must do it tomorrow...even though there are many other stocks that move big on earnings besides GOOG and earnings season lasts for months, 4 times a year; you are in a rush, why? this is insanity, sir.

      Since you've kept me up, I will now backtest the first part of your strategy for the last few earnings. 40 contracts of the 3rd month out .10 delta strangle and see what I get.

    • So basically you're assuming that the stock isn't going to move at all. And what are your strategies?

    • ok one peice of advise: if you do do it, use small number of contracts not 40 on each side

    • Aside from "don't do it", no.

      I don't play options at expiration (haven't read Augen's book but have read his others). And my strategies for earnings are very very different from anything your considering.

    • keep your money safe "Grasshopper"... wait this one out and play the weekly options

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