Update on a Volatility Play
The volatility play from yesterday worked, but I don't want to stay long, as was my premise when I entered the trade. The approach was to get long SPDR S&P 500 (SPY) August 31 $140 calls and long Russell 2000 iShares (IWM) August 31 $81 puts in a long 2 calls by long 3 puts ratio for $3.43. The value is currently around $4.00, and this is plenty enough to hit the exits. More aggressive traders may hold on to about 10% to 20% of the trade so as not to risk any original capital but take a shot at more upside with the current profit in the position.
The bullish calendar spreads were the play on Splunk (SPLK), or even both calendar spreads were the play on Splunk. Splunk did get the move that options were pricing right on the nose, but OmniVision Tech (OVTI) came up well short. I was not overly impressed with either report, but my opinion doesn't matter in the market's eyes right now, as both stocks are higher. I will hold on to my Omnivision ratio put spreads. I don't think there will be much of a chance of having to buy the stock, but a fade is still possible, especially if the market gets weak over the next month....184 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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