Google time!

[ratiogreg]

Today again, i entered my favorite play. I am hoping GOOG will pin his strike at 590. I went in at 9:40 am with 3 put butterflies, with a profit potential of $340 each. Exits are my breakeven. Will tighten them up in the afternoon if i m still in the play.

[ratiogreg]

Stopped out

[awtrader]

rg -

I too play the pin in Google, following the lead of Karl K (where are you Karl?). If you haven't read his posts on the subject you should - they are full of useful guidance.
That pinning play can be a little tricky and nerve racking as it was today, or seriously deceptive as it was a few months ago when it looked level all day until jumping at the close.

Today I didn't enter the trade until about 11am (CST) when it looked pretty likely to go to 580. With iv this low it is not a good R/R ration so I only did 2x, and probably should have closed them out when I was up over $160, but didn't. Eventually I closed out one before the late afternoon push up almost halfway to 590. The remaining short call contract was going against me so I got in and out several times, losing a bit on each move. At that point I was down overall. I finally held back until it again dropped below 583 with twenty minutes to go and again sold the call and rode it down close to 580. In the end I came out about $120 up. I realized later I probably could have doubled up on that last short, but did think of it at the time. But I think the main lesson is to indeed get out quickly when this trade goes against you, because you can generally get back in with a decent premium left.

As to your trade in earlier in the morning (I'm not sure whether 9:40 am is Central or Eastern) I think the safer choice would have been to sell the call spread only at that early time. (Karl describes this in his posts.) I wish I had done that, but I wasn't really watching GOOG that early.

I did a successful pin play in FDX, which converged perfectly. But again, since the R/R looks so extremely bad I only did a few contracts.

-aw

[donpick]

I thought the Feb 660/670 call spread was an profitable idea. When I was filled it the credit was 10%. Looking at the analysis screen, it might be safe to expiration.

[ratiogreg]

Hey Don, sorry I havent followed up on this. I read Karl's threads a while ago and they are based on Jeff Augen's studies on the pin. Augen likes to pin with a 1:3:2 butterfly (which i find dangerous on a single stock; you get a -2 delta on one side of the spread with a nearer breakeven). But overall, I think you are right, it's probably wise to leg in with a vertical and then later with the other.

I entered at 9:40 am EST because it as you said, the IV was already low and it seemed to me that the premium wouldnt be worth the risk later in the day. I go out at (expiration) break even, with a small loss mainly driven by the widening of the bid ask spread when GOOG was tanking. And also, it seems that it s not worthy entering a short close to lunch time, because the IV stops dropping for 60-90min at that time.

Most of the time my position is winning before it starts tanking, so this may be a type of play you wanna scale out based on a time stop.

Did you play the last GOOG expiration? i remember earnings werent coinciding with exp day, and that bothered me so i didnt do it. By the way I didnt know FDX had a tendency to pin as well.

[biggreycat]

anybody trying similiar plays this wk?

[ratiogreg]

Will do if there is enough premium left. I wish the market tanked a little tomorrow to get an better IV on friday morning.

[awtrader]

Not this month

[donpick]

My GOOG call spread expired peacefully.