OptionPundit

Tag: Option Expiration

  • SKF Smiling Flies, +100%

    The free trade idea on SKF resulted in +100% gains.

    screenhunter_01-mar-21-0433 First starting with FDX and NKE, I had these puts from the starts but even those who followed the notice and decided to follow the trade must have benefitted as well. Then I shared smiling butterflies on SKF, High Risk High Reward Trade, and it closed for +100% gains for one day holding. NKE was pinned at $45 (GS, AAPL, and POT weren’t really pinned this time). Though I identified GOOG pin at 330 in the beginning but I was biased for it move closer to 325 or 335 and mentioned accordingly on the forum.

    Net net, a fantastic, thrilling and rewarding option expiration day. Congratulations to those who benefitted from the SKF/NKE and PUTs as well.

    Profitabel Trading, OP

  • Smiling Butterflies for SKF

    As I mentioned in my earlier post, an expiration Friday is a Thrilling Friday full of opportunities but mostly speculative. Intrinsic Value driven by Time Value and Implied volatility reduces to almost zero and creates powerful leveraging instrument. On an expiration day 100% of returns are not unusual. In fact I am yet to break my record for +1,200%.

    If one can accurately estimates pinning points, butterflies usually offers one of the most rewarding trades. I decided to take chance on SKF expiration and play speculative strategy, High Risk High Reward.

    (You may want to sign-up for the Basic Membership (Free until Dec 2009) that I use to share free trade alerts for registered members). I hope you saw my notifications on NKE and FDX timely on Invescafe.

    Here is a Trade on SKF. Before you proceed to read, pls note that I am assuming that I will lose all my investment in this trade in case it doesn’t work out the way I want it to. Hence if you decide to follow that logic pls do so with the money that you are not worried to lose 100%.

    skf-smiling-butterflies I purchased 120 and 130 butterflies, 5 strike wide. The overall cost was $0.83 for 130 call butterfly and $0.90 for 120 call butterfly. Total cost US$1.73. Assume 2 butterfly for each, that means the cash outlay is $346. If SKF expires today either at 120 or 130, my potential is to make nearly $600. The trade will make money as long as SKF closes between 116.71 and 1223.32, or $126.7 and $133.2. As of this writing, the spreads are already profitable. Pls note that I may adjust or close early and may not be in a position to share the plan timely. Though I shall update at the earliest via posting in the comments section.

    Don’t forget, though these are smiling, it can turn into crying ones (though limited tears)..

    Have fun, Profitable Trading, OP

  • Equity Option Expiration and Pin Opportunities

    Today is a special day, a day that occurs only once a month offering good opportunities for intra day trading. Today is Aug’08 option expiration Friday.

    Before I proceed to talk about opportunities, pls note that the threshold for automatic exercise of stock-settled in-the-money options is $.01. Long equity options in the money by $.01 or more will be automatically exercised. Please monitor all your expiring positions and check with your broker for if you do not want to be assigned. Also be especially careful with the estimated $.17 DIA dividend on Friday morning.

    If you are looking for some past discussion, check out OP Forum (free section). If you are an OPNewsletter subscriber, pls check this link to see an example of GOOG pinning in action.

    Top of the list includes Google(GOOG), ISRG. OIH, MA. Other key tickers to look at are Goldman Sachs (GS), Apple (AAPL), CME Group (CME), Amazon (AMZN) and Research in Motion (RIMM). But be careful, as options will lose time value and IV very rapidly. So if there are chances to make disproportionate money, so are the chances of loss.

    Pls do your own due diligence and stress test your strategies, create “what if” scenarios and understand the risk/reward so are prepared in advance.

    Profitable trading, OP