Well the VIX has been dropping pretty hard over the last few days. The bad news is calendars are long vega. The good news is that IBM is sitting on the strike.
We are still sitting around 105.
Havent had to do anything yet!
I've decided to enter into a IBM Calendar for a couple or reasons. IBM has earnings at the end of the July Cycle. Typically, stocks will channel into earnins.
Welcome back, sorry for the delay in updating. We just found out my wife is pregnant, between that and some of the other irons I have in the fire I have been absolutely swamped.
Well, I exited the straddle today, for a loss of 20%. Yes even the great ones screw up sometime. But this brings up a good subject to talk about: when to exit a trade.
If we had purchased the 53 straddle as opposed to the 52 we probably would have been in good shape. I made my first managment mistake by not selling my extra 52 put on the bottom.
This is how I looked at the end of the day today. FYI: I bought 1 extra put to neutralize the delta when I opened up the trade.
I have had several people ask me lastly about whether it is a good time to get long straddles. I think with the VIX below 30 they start to get interesting. Here is what I would say.
I traded GM for a period of time in 2006 and 2007. On interesting thing of note: There was a MASSIVE amount of open interest on the Jan 2009 5 and 10 puts and likewise in 2010.