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Strategies & Market Trends : The ultimate play:STRADDLES on earnings announcements.
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To: Avi Halpern who wrote (51)7/26/1996 1:24:00 PM
From: Chris Baker   of 140
 
Avi - You are on to something there, and I'm thinking of trying this too. The volatility may be created when some of the bigger investors buy slightly out of the money puts or calls for 1/8 - 1/4 and then buy or sell large number of shares of the underlying stock to try to drive the stock price up or down so their options end up in the money.

Option expiration week reminds of a rugby match, if you've seen one, except that players are allowed to change sides periodically (go long or go short). Teams may consist of entire trading houses. This seems to be a popular Wall Street sport that many players (like yourself) look forward to. However it's rather disconcerting to the bystanders (small investors) - watching their investment going wildly up or down.

Good post - I'm still studying exactly how options expiration week works and especially looking at why some stocks with significant Open Interest often close near to a strike point. Meanwhile when Option Expiration Weelk is here I'm going to be buying some of those out-of-the money options near the strike point for 1/8 - 1/4. I like your strategy of using a straddle - hadn't even thought of it before in this application.
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