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Google Earnings, Profit + 361%

Published on July 20, 2007

Google Earnings, Profit + 361%

July 20, 2007

(For details pls visit www.OptionPundit.net)

This was quite unusual  a trade as I was expecting a move that never happened before (at least in $$). I mentioned that I was expecting a move of about $50 (Google was at ~$555) and here we are, Google dipped as low as 509 that is app $46 points move since then. Well, let’s not be so fussy about $50, I also mentioned that I am opening $510, $520 and $610 butterflies with the $10 interval to play Google earnings in a cheap way.

Here are the results:

  • 610 call butterfly (600/610/620) opened at $0.35 per spread
  • 520 put butterfly (510/520/530) and 510 put butterly (500/510/520) means an Iron condor consisting of spreads of Sell 520/buy 530 ($ 2.40 debit) and sell 510/buy 500 (credit $1.05)
  • Total Investment = $0.35+$2.40-$1.05=$1.70 per spread

 screenhunter_15.jpg   screenhunter_16.jpg 

Closure of the trade:

  • 610 call butterfyl, worthless now
  • 520/530 sold for $8.75 credit
  • 510/500 bot for $0.85
  • Net credit = $8.75-$0.85=$7.85 per spread

 screenhunter_17.jpg 

Total Profit = ($7.85-$1.70)/$1.70=361%

If it never happened, doesn’t mean it can not happen or it will not happen.  

Profitable trading, OP

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