Option Picks for the Month

[anirav]

Hi All,

Pls post your Option picks and recommendation for the month here. Share your views here.

Cheers

anirav

[MrSer]

I own june 10 calls on ico brought in @ .55 its .80 by .85 now. I except it to go around 11-12 dollars a share. Been big block buying for weeks. I will get out in 2 weeks.

[MrSer]

Barrons article on their thought about coal. Pushing coal stocks in after hours and will likely have an affect tomorrow. These stocks are on fire and if you don't own any coal stocks you should get in before the stocks run up even more.

[madcowdisease]

ANF calls would have been good prior to the market close today with them reporting tomorrow.

[netwrangler]

Hard to pick an option for the month.

Options are such 'in the moment' derivatives.

[Imperator]

volitility is really low, so I would be more likely to buy options than sell them.

I'd look at call spreads on

GLW
BEAV
GME

[wallstreetsedge]

MA would be a perfect play imo

[aiki14]

Originally Posted by Imperator

volitility is really low, so I would be more likely to buy options than sell them.

You might want to reconsider that, In time's of low volatility I'll sell straddles all day long. No risk in being exercised if the price of the underlying is static. If there is a lot of volatility I'll buy straddles and hope to profit on both sides.

[netwrangler]

Originally Posted by Imperator

volitility is really low, so I would be more likely to buy options than sell them.

I'd look at call spreads on

GLW
BEAV
GME

Originally Posted by aiki14

You might want to reconsider that, In time's of low volatility I'll sell straddles all day long. No risk in being exercised if the price of the underlying is static. If there is a lot of volatility I'll buy straddles and hope to profit on both sides.

Volatility, thy name is...

1. Historical?
2. Implied?
3. The VIX?
4. All of the above

The answer, of course, is

'd. All of the above'

and (to continue with the oblique Hamlet reference) there's the rub.

The VIX measures the volatility of the market as a whole.
Here is a chart of the VIX for the last 90 days.



The chart supports Imperator's statement [if not his spelling] that "volitility is really low". In fact, volatility yesterday is close to the low for the last three months.

But the VIX is a measure of the market. How does that translate to individual stocks?
Imperator mentioned GME as a stock of interest. Here is a chart of the volatility of GME over the last two years. Included, as well, is a GME price chart for the same time span.





GME appears to be in the middle of its long-term volatility range. At ~40% [for a 25-day window] GME's share price volatility is about twice the VIX.

But what does that say about the price of the option?
Most option screening systems compare the historic volatility of the stock price with implied volatility of the option. If the option volatility is higher than the stock volatility, that indicates the option is 'overpriced'. [NOTE: It might also mean the market senses something is up, but that's another subject.]

Here is a table of the GME JUN calls chain using yesterday's closing price.



Two things stand out:

• You can see the volatility 'smile'. Lower volatilities usually lie closer to the stock price and go up as option strikes get further into or out of the money. In this case, the 'smile' is shifted to the right by a few strikes. I'll put that down to 'market expectations'.
• All of the option volatilities are higher than the current stock volatility.

This suggests that the options are 'overpriced' relative to historic volatility of the stock. Aiki's strategy of selling straddles should work. But, given the relatively high volatility of GME's stock price, the straddles would bear watching pretty much continuously.

[nishcarter]

Traders...
STP gonna announce their quarter results on 22nd. Go for call options since solar stocks are gaining momentum.

June 50 call --> STPFJ

after market is already up by 89 cents.

cheers