Net P&L slightly up now to +$134. Big gainers here have been ETE, VALE and CTL. CTL is a new position I took on the 2nd May after some suspicious put volumes prior to earnings made me think the market could take a dive. And it did! Numbers were poorer than expected and the stock has taken a hit. Now I need to consider what to do after a large move...just close out the profit or perhaps sell an out-of-the-money put as a small hedge?
Open P&L +$134.
|EMC Long Put||13-Apr-16||22||-110|
|ETE Long Call||19-Apr-16||16||190|
|MRO Long Call||19-Apr-16||16||-66|
|KEY Long Call||20-Apr-16||15||24|
|MS Long Put||20-Apr-16||15||-40|
|VALE Long Put||21-Apr-16||14||165|
|JNPR Long Put||21-Apr-16||14||-10|
|KMI Long Call||28-Apr-16||7||-80|
|IPHI Long Call||29-Apr-16||6||-40|
|NG Long Call||29-Apr-16||6||-60|
|MRO Short Call||29-Apr-16||6||52|
|CTL Long Put||2-May-16||3||109|
Full list available from Option Scanner Pro
HRB Stock tanked on Wednesday the 27th after the company reported a disappointing tax season. Outlook remains bleak for the stock and their next report is due out in June.
However, it appears someone knew of the pending downward move in the stock.
Option scanning tools showed that the $23 put option had significant volume trade the day before the stock plummeted. 19k options traded through one strike, which saw the puts outnumber the calls traded by 5 to 1. The next day, HRB drops 13.56%.
The Puts rose 386%
Delta measures the theoretical change to the value of an option as the underlying changes. This means the option's value is tied to the underlying by the amount of "delta" the option theoretically has. Traders can then offset the risk of the opiton by trading an appropriate amount of shares in the underlying security
The Binomial Model is the model of choice for American styled options - that is, those options where you can exercise any time up until the expiration date. Even though Black and Scholes was the original option pricing model, the Binomial Model is probably more widely used than B&S.
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