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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: KFE who wrote (2005)	10/27/2000 1:07:41 PM
From: RoseCampion	Read Replies (2) \| Respond to of 2241

Holding through the announcement can be dangerous because the collapse in IV can be overshadowed by the directional movement of the underlying. Ken - understood; in your (delta?) neutral spread you wanted IV to rise so you could close at a profit. In this case, of course, it was exactly the opposite effect - the collapse in IV completely overwhelmed the large upside movement in the underlying. If I'd been in a more neutral position (rather than simply long) I'd have been better off. I might have, for example, sold calls at the close yesterday to make my long call into a debit spread, and been in great shape. As it is I can still close at a profit (due to a very favorable initial entry point), but not nearly what I expected to get. A very cheap education in the importance of (1) hedged/spread positions, (2) thinking ahead about the likely changes in IV when market uncertainty is removed. thanks, -Rose-