Option Strategy for Volatile Stocks...

Question

Does anyone know a solid option strategy to play volatilty of a stock. I am looking at how implied volatility usually increase significantly on certain stocks as their earnings date approaches. (Some top examples FSLR, SNDK, AMZN... )

I know the basic long straddle or long strangle should work (if the price moves), but I am looking for some other strategies.

Any help would be appreciated.

IHalf2Pee · Answer

Does anyone know a solid option strategy to play volatilty of a stock. I am looking at how implied volatility usually increase significantly on certain stocks as their earnings date approaches. (Some top examples FSLR, SNDK, AMZN... )

I know the basic long straddle or long strangle should work (if the price moves), but I am looking for some other strategies.

Any help would be appreciated.

WagerPlus2008 · Answer

You can play outright up or down trends using a call/put option spread (aka bull or bear spread)
This is done by buying a call option, and selling a further strike price call option, that expires in the same month. By selling your further strike price option, it reduces your entry price.
However in most options trades, commissions become a limiting factor in netting profitable results.
Therefore do your due diligence prior to performing one of these trades.

Here is an example:
https://www.voptions.com/bullish_strategies_long_stock_ratio_call_spread.htm

STEELDRC · Answer

BOL

Option Strategy for Volatile Stocks...

Hot Forum Topics