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I have an idea that the market may retest the prior high, so I might go long on Monday, if the market confirms my idea. Confirmation means failure to go lower.
The straddle is not a hedge against risk. It is a non-directional trade with a long volatility position. But as @timmyb pointed out: If implied volatility is already high any long options positions - including straddles and strangles - might lose premium very quickly, so maybe it is a bit late for a long options position.
I am not an option trader, and I am not a gambler. If I do not understand something, I do not trade it.
So did you throw caution to the wind and take a position? I'm expecting yes.
You had stated you were limiting your risk to $300, so it wouldn't be the craziest move anyone has ever made,
but what were your assumptions to turn $300 into $50k (or even $25k)?
Call 33 March 2011 was quoting $3.00 this morning.
So if you buy this call ($300), and if VZ quotes more than $503 before March 18th, you'll win $50k:
(503 x 100) - $300 = 50.000.
Ok, it's only +1400% of the stock value in 3 month...
I saw these going for 0.07 yesterday and 0.01 today on a buck spread between the 39's and 40's so it would have done a few percentage points in a couple of days. So sold at 0.05 or 0.06 , buy back at 0.01
Shares in Verizon Communications fell 82 cents, or 2.3 percent, to $35.10 in afternoon trading Tuesday. The shares are still close to a two-year high of $37.70, set last week. Apple shares lost $1.20, or 0.4 percent, to $341.29, while AT&T lost 53 cents, or 1.9 percent, to $27.81.
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"