EricSimpson1

Whoever came up that rule is a scumbag. Is there any way to fight it?

I have no idea where AAPL stock will end up but I really think it will be a lot tougher for them without Jobs. He may have a been a manipulative psychopath, but he had the extremely rare ability to see what most people wanted before they even knew it.

Kim, is there a certain level on the VIX where you would not enter a calendar trade? I know it's rare, but my concern is that when the big market moves occur, they tend to be clustered together, and this period of high volatility can last for a few months.

Most of your losses came from ADM, which I assume you were forced to hold through because of Hurricane Sandy. That type of event occurs once every several decades. If you throw that result out, you are doing a pretty good job with the pre-earnings IV strategy.

Nate Silver's statistical models have been reasonably accurate in the past. Right now he has Obama at an 85% chance of winning. Intrade has Obama at a 64% chance. Many other betting sites are predicting an Obama win. I don't know what the market will do but I wouldn't be surprised if it has priced in an Obama victory by the time the results come out. Romney winning would probably cause a larger move either way, because he has longer odds. I don't plan on trading the election but I'll keep an eye on my QCOM pre-earnings straddle due to the possible impact on IV. I might get out a day earlier.

Looks like guidance was below expectations. Oh well, out at 0.10. About 90% loss.

Earnings are 11/1 after close. I'm going to hold through and sell on 11/2, unless it gets above 14 before then. I don't have much money in it so I can take a 100% loss. SODA is another stock that repeatedly bounces off of strong support, but the time frame is a bit shorter and the support changes every few months. Like SKUL it has an extremely high short float(>50%) and short ratio(>10). It also has positive earnings(so the fundamentals aren't completely broken, otherwise it would drop steadily like RSH). Market cap is also at least in the hundreds of millions. If anyone finds more companies with those characteristics let me know. If the chart shows similar behavior to SODA and SKUL, that might be the formula for a great "trading stock."

Actually nevermind what I just said. I'm going to break all the common trading rules again and chase this stock. This is too good to pass up. Bought some Nov 12 calls at 0.95.

Well now it looks very tempting, I'm still going to wait a couple weeks. Many good pre-earnings trades are coming up and I need to focus on those. Good luck to you guys who just bought and don't be surprised to see some manipulation of the stock and a small jump in price at the end of the day today.

If it's still down in the 12's or low 13's two weeks from now I might pick up some calls to hold through earnings. I rarely go directional on earnings because usually it's not worth it but in this case I think a lot of negativity is already priced in. Short float and short ratio are still insanely high and it's not too horrible of a company.

Got filled earlier this morning at 1.70. About a 40% gain after commissions.

I have a sell order set at 1.65 on the Oct 12.5 calls. I think it'll get there eventually.

I'm still holding. I'm probably not going to sell until it gets up to the 14's.

Out of the second trade at 2.98. 17% loss.

I probably need to shorten my holding time more for these trades. Out at 1.41. 15% loss after commissions.

Chris has posted about doing something like this. It was mentioned in this thread: http://steadyoptions.com/forum/topic/322-holding-thru-earnings/ If you compare the implied moves right before earnings to historical moves of the stock after the results come out, it will give you a better idea of what type of trade(straddle, IC, calendar) to hold through earnings. You can probably be successful with this as long as you make sure commissions don't take away much and your allocation is small.

Well There hasn't been any short squeeze yet. The jump last Friday may have been shorts taking profits after it got hammered earlier last week but I'm not really sure. Most stocks with a high short float go down in the long run because they are usually bad companies. But in some cases such as this one, the stock has been shorted to a point where it would be insane to short more in the near term. I know the market doesn't always behave rationally but I think this is a risk worth taking assuming you allocate very little. I also don't really like technical analysis and I don't believe that past performance guarantees future performance, but 5 of the past 5 times SKUL has gone below 13, it rebounded to at least around 14 within the following few weeks.

Ouch. Sorry to hear that. I've been there before.

That selloff was bizarre. It might be one person playing around with the stock. Doesn't take much to move it. I'm just going to hold my calls until I get a pop. Could be a week from now. Could be never. I didn't use stops and don't mind losing 100% in this case since I put very little in the trade.

And I'm in the Oct 12.5 calls at 1.20.

To add on to what Thaze was saying, any good news can cause stocks with high short floats to shoot up in a very short period of time(the "short squeeze"). Check out the chart on Volkswagen (VOW.DE) in late 2008. That was the biggest short squeeze ever. A ton of hedge funds and big traders were short the stock. When it was revealed that Porsche had been quietly buying up shares and had built up a large stake in Volkswagen, all the shorts panicked and bought to cover. Volkswagen's stock price went up a few hundred percent in just several days and became the most valuable company in the world for a very brief period. Obviously a short squeeze of this magnitude is a very rare event, but there is always a small short squeeze occurring in some stock every day. Another thing to be aware of is that when you have a classic short squeeze, they are usually followed by large drops.

I might buy some Oct 12.5 SKUL calls and hold a day or two if the stock continues it's bounce. I don't think it's even worth doing a straddle in this case. It's been knocked down a lot the past couple weeks after a Morgan Stanley downgrade, but it looks overdone. Short float is absurdly high at 70% with a short ratio of 22.

After, but I'm not expecting to profit from this trade based on IV. I'm trying to get a decent move. But I do make sure that IV is not too high compared to where it should be around this time between earnings cycles.

I'm back in. This time I bought the Oct 23 calls and 24 puts for 3.58. This stock has had an amazing run up but it's 4% today so far. I think there could be some big momentum either direction from this point on. I'm holding until next Friday(9/21) unless I hit a 15% loss or 50% gain before then.

I use finviz to screen candidates. Look for Optionable stocks with a most recently reported short float of about 15% or higher. Check which ones are up a lot( like 5% or more) in the past few days on high volume. Check news headlines to figure out why the stock is up. Check if options are liquid. Check if IV is below 30-day HV or near it's 52-week low. Still a crapshoot, but not as much as doing straddles on random stocks. Still trying to improve the entry and exit points. And maybe 20% of it is gut feeling.