« Update on NOV and OXY Straddles (8/14/08) »

The following is an update on the two options picks used as illustrations in the volatility options trading strategies webinar.

There has been no follow-through to the upside on the two stocks, since yesterday (see yesterday's updates at this link). Prices have, in fact, lost ground and have moved back into the strikes. Since expiration is tomorrow, and there will be a lot of time value premium lost overnight, it would make sense to consider closing off the illustrated positions by the close this afternoon or rolling into SEPT options immediately.

We're not going to discuss the repair strategy - rolling into SEPT options - at this point. Such a strategy is considered at the intermediate level and we'd rather wait to cover it in a more exhaustive manner in the Options Coaching that will start in mid-late September.

So, for the purposes of following-up on the illustrations provided in Monday's webinar, we'll consider the trades to be closed by this evening, or for the really adventurous by tomorrow morning (just in case there is a big overnight move) at the latest, and then on Friday/Saturday we'll provide a couple of p/l diagrams and brief descriptions of how and why the straddles changed value over the five days leading into expiration.

One of the goals of the webinar was to provide a context to volatility trading strategies and the pros and cons of the using the same. We'll provide a little bit of insight into these topics in that final follow-up to Monday's webinar.