If you end up doing this, I for one, would be interested in hearing about it. If you're lucky, the judge will do this on the Fri before options expiration so theoretically, prices will be lowest... but in practice, it isn't usually so.
My opinion, being the conservative trader that I am... is that you'll get eaten up w/ spreads first (anywhere btw 1/8 to 1/4 each, commissions second (probably $100 for each time you do this), and if you're lucky, not much time decay from Fri-Mon.
I ran a few numbers w/ current bid/ask. w/ today's close, if today were a Friday, MSFT would have to move +/- 7pts in order to roughly breakeven.
If I were to do it, I'd buy only 10 contracts each.
you buy the strangle for cost of $2500, on Monday, after a 10 pt move, you can sell both for net of $1100 if calls win, $700 if puts win. (you'll get a little something for the other side, so let's give that for spreads + commission)
if you pick the wrong wkend, it'll cost you spread+commission at least... $100+$200.
you don't want to guess the wrong wkend too often.
if you do this the wk before expiration, you might hit breakeven on +/- 4 or 5pts. then on Mon, w/ 10 pt move, your winning call might net you $2200, put $2400.
but the other side will be worthless.
of course, who knows what the MM's will do w/ the volatility and how the volatility will decrease on the monday after the verdict. you might only end up making half (or less).
just my opinions... tried to be correct... std disclaimers apply. |
