OptionPundit

Google to find support

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OptionPundit

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For OP readers who like to use technical analysis, check out Google’s chart today. It is about to find support. You may draw your conclusions, my guess is that it is going to be pinned somewhere between 450 or 460 before it either rises or falls below the support level. The key driver is Option expiration Friday i.e Feb 16th.

Recall last month I had played Google iron fly on the expiration day resulting in some nice gains (click here for Google Jan Iron Fly).

Attached charts is a simple textbook suport and resitance chart. Though I don’t believe in too much of technicals, exception always exists:Google Chart Feb 12 2006

Cheers and have profitable trading, OptionPundit

Comments

5 responses to “Google to find support”

  1. Optrader Avatar
    Optrader

    What do you think of this as an earnings play on NTRI? (Very volatile):

    – Sell 10 Feb 40’s at $3.40
    – Buy 30 Mar 50’s at $0.90.

    Buying the March’s instead of the Feb’s should protect us from the IV crush that will probably happen. What do you think? This is looking good on Thinkorswim.

    Reply
  2. optionpundit Avatar
    optionpundit

    OPtrader, on the surface it looks good especially if you don’t consider the iV crush for March options. But that will happen too so look at the chart what happens if the volatilty is crushed by 30% for March and roughly 60% for Feb, that shd give roughly a good idea on what are the breakeven points and if it’s a good play.

    Profitable trading,
    OptionPundit

    Reply
  3. Optrader Avatar
    Optrader

    Do you know how to do this in TOS? (have different IV movements for different months). I thought you could only change the volatility of the underlying.

    Reply
  4. optionpundit Avatar
    optionpundit

    Yes you can. I suggest reviewing there analyze video.

    Cheers, OptionPundit

    Reply
  5. Optrader Avatar
    Optrader

    Ok, I found it. Did not know about the “more” option. Any reason why you suggested 30% for March and 60% for Feb? How do you figure this out? Do you look at historical values?

    Reply

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