Are you comparing a company with global changing technology to a pet-supply retail organization?
Yeah, I didn't really think so. This company is NOT on the cusp of a major upswing. Each quarter they seem to do incrementally better...then they have one bad quarter that mucks everything up.
I've posted before that nobody is buying into this single digit revenue increase. They need to see something significant.
So, while they are showing increases, they really need to expand their business so they can generate double digit growth.
So, if anyone had written this strategy a month ago, you could have closed it out today and made about 7 points...without the risk of holding for the news.
Yep, a lesson for me as well to listen to my gut.
you don't need a margin account for Level 1 options (selling covered calls). But you do need to complete an options agreeement and get approved.
One flaw in your logic
Once the news comes out...the options premium will crater...so you'd likely get little for a future option trade.
Writing a put is bullish...but writing a straddle is betting on lower volatility and smaller share price movement.
Maximum gain for a straddle writer is if the stock ends at the strike price.
In my earlier example, I would not get my fanny spanked if I wrote a May $25 straddle as I would have taken in $22-$24...so if the stock goes to $5, I would actually still make a couple of bucks.
As tempting as that is, I am not doing that as if the stock goes above $50, I would be forced to cover on the call side and it could cost me a bit.
writing a straddle is making a bet that when the smoke clears and the risk trade is no longer on, the stock is still going to be 'somewhere' in the vicinity of the strike...but you don't know on which side. So whether the stock ends $5 or $10 bucks above or below the current price, you made good money on the trade.
"There s almost zero risk to the downside". That is actually very true. If the stock goes to zero and you took in almost $24 in premiums, it's essentially a wash. I addressed the risks of the stock going the other way.
That's what i was thinking....except maybe writing May $40s.
So if someone sells a May $25 straddle, they collect between $11-$12 on each side. There's almost ZERO risk to the downside...The risk is actually on the upside...if the stock goes above $50.
Otherwise, another play is to sell a covered call with the significant premiums for strikes well out of the money.
Anyone playing it this way?
It's always nice to pontificate as to "why" earnings announcements come at certain times.
But the story behind whether announcing pre-market vs after market, early in the week vs later in the week, or early in the reporting range vs later in the range has been analyzed and debunked. Generally, when a company chooses to report earnings has no bearing on whether those earnings will be good or bad, or whether there might be some important updates to disclose.
Fun to talk about, but really no bearing on anything.
Where do you guys come up with this stuff?
The drop in price was due to Axiom's report that the YIELDCO was a 'bag of bad assets'. Look at the news and the timing of the news.
As for earnings, it's NOT all about APPLE and the YIELDCO.
No reason?? Both SCTY and SUNE came out with disappointing earnings. I think the stock has done alright this morning considering.