The ultimate play:STRADDLES on earnings announcements. Message Board

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Strategies & Market Trends : The ultimate play:STRADDLES on earnings announcements.

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To: farouk a. hassieb who wrote (49)	7/25/1996 11:04:00 AM
From: Chris Baker	of 140

Farouk - You probably have a good sense of market timing of USRX, but here's what bothers me with those short-term options around earnings: USRX after close yesterday: Aug 70 Call 5 1/8 - 5 5/8 Aug 65 Put 6 1/4 - 6 3/4 At 10:45 am USRX ( down 10 from yesterday's close): Aug 70 Call 5/8 - 7/8 Bid Down 5 from Ask Close (5 5/8) Aug 65 Put 10 3/4 - 11 Bid Up 4 from Ask Close (6 3/4) So in theory you would have lost 1 even though the stock is down 10. You probably used good market timing to avoid this theoretical loss but in general there's seems to be no easy money to be made on these short-term earning plays. Play might have worked better with long-term options (just buy fewer), but I will evaluate this later. On those USRX Aug 70 Calls, the market has been wary of USRX modem line because of ongoing price war. I follow Zoom a bit and checked a couple of large retailers north of Boston last week. I believe USRX may have shipped Sportster 28.8 modem in quantity this month while competitors may ship 33.3 modems in quantity next month. Many larger investors seem to have a good feel for monthly retail sales from private survery services.

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