It was another wild week for option traders highlighted by GMCR's enormous 50% move lower on Thursday. As an option trader you want stocks making big moves, not trading flat.
Aside from the spectacular GMCR puts option trades I wrote about Thursday and Wednesday, there were plenty of other strong moves today.
On Thursday NFLX sat firmly above $80 a share, its $77.50 weekly puts traded to a low of $.20. NFLX proceeded to fall hitting a low today of $72 an almost $10 move. Those $.20 puts hit $5.10 today. $200 into $5,100 has you gotten in at the low and sold at the high. I took a dabble on the other side on Thursday and went long the calls, which were up a little I sold out later for a solid loss as NFLX continued to slide.
How about RIG? I played RIG to the upside for earnings on Wednesday night. Thursday morning my $50 calls I bought at $.97 are up to $2.30. I ended up selling at $2.24 about 3 minutes into the trading day. That was a great trade, but had I held my calls I would have been very disappointed, which is why it is important to lock in profits. That reversal I wrote about lasted about half a trading day. After the pop to $52 and change you could have bought the $49 puts for pennies a low of $.02 and they hit $1.36 today. That's $100 into $6,800.
Crude Oil took it on the chin today, but the same could not be said for put holders. The $38 strike closed at $.04 yesterday and today hit a high of $1.04. Thats $80 into $2,080.
LNKD had a great move off earnings last night, but option traders are a pretty smart bunch. Most of the calls strikes that you would expect to see big gains when a stock moves 8%, were already trading like LNKD was going to make a 10% move higher. Consequently call buyers of out of the money strikes, who were betting on a big LNKD move ended up getting burned.
FSLR had the same type of day, as the option premiums were high, as traders expected a big move. Option holders at the open of trade saw the value of their weekly out of the money calls and puts dwindle to almost nothing. The $18 puts dropped to $.04. Later in the day those same puts traded for $1.04. All was not lost for FSLR option traders, the big trade was during the session and not front running the earnings announcement.
AAPL this was the second week in a row I unsuccessfully tried to time a bounce for AAPL. AAPL closed at its lows and frankly, there was no bounce. Just a frustratingly slow death for anyone holding calls today. PUT holders, on the other hand, had every reason to rejoice. The $570 strike went as low as $.50 today and closed at $4.75.
Volatility is creeping back into the market again, which means solid gains for option traders.