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Looks good. How would you compare this to selling the June RMBS 17 put? RMBS shows a 37% prob. of expiring vs. 42% for MU, and offers a juicer premium. Would that make you favor the RMBS trade over this one or is it not really possible to make a good comparison?
Well you bring up a good point, this is really double dipping in the same sector and thus doesn't make a whole lot of sense. If I had to chose between them I think the RMBS IV sell is more compelling. For me the only difference between them is I'm willing to own RMBS but the MU is just a technical trade that I would exit if my exit point is hit. But I found some interesting anecdotal info in the form of pictures, check your email.
As far as I can tell from some cursory research the long awaited trial is supposed to start in early June - so maybe that is why June IV seems to be spiking. There could always be more delays,a mistrial, or a last second arbitration so plenty of uncertainty.
Sold more for $1.07. Now I'm really done, and I may think about buying some the 15 put in case something really bad happens. For now will not do anything else. Jason - do you have any further take on price action in the puts today?
You've been commenting on the MU post but I'm pretty sure you're talking about RMBS. I actually took today off and haven't seen the price action, but I've posted something similar in the past in that I don't understand or couldn't seem to find a reason for why IV keeps getting bid up when the last six months nobody has gotten paid for doing so. I get a little nervous because you tend to think somebody knows something, but IV is a sell until given a reason not to in my opinion. We've been paid enough times already that if we end up owning it a cost average price that is attractive then so be it. Here is why I'm still comfortable with that, if it does eventually take a dive, IV should shoot up even more. So I would just turn around and sell a call that should have a nice premium because of it.
I actually closed out this MU play today for a scratch trade, made a half penny after commissions. You made a good point about them being similar trades but better reward out of RMBS so didn't make sense being in both. If the NASDAQ or market in general sells of these will trade down in tandem. I've got enough exposure to RMBS.
Darrin, Dominic set the HV/IV code up for me, below is the code and directions. Beware, I've found the IV on TOS to not be reliable. Before LiveVol and iVolatility started charging for IV charts recently I would check TOS against them and they are different. If you figured out why IV is off or what adjustment we can make in the code then please let me know. I'm not interested in paying $250 a month to LiveVol.
Go to your chart settings as if you are going to add a new study and click new to create a new study… Paste the below into the dialog box after you name the new study.
#begin declare lower;
plot IV = round(impvolatility()*100); plot HV = round(historicalvolatility()*100); #end
Looks good. How would you compare this to selling the June RMBS 17 put? RMBS shows a 37% prob. of expiring vs. 42% for MU, and offers a juicer premium. Would that make you favor the RMBS trade over this one or is it not really possible to make a good comparison?
ReplyDeleteWell you bring up a good point, this is really double dipping in the same sector and thus doesn't make a whole lot of sense. If I had to chose between them I think the RMBS IV sell is more compelling. For me the only difference between them is I'm willing to own RMBS but the MU is just a technical trade that I would exit if my exit point is hit. But I found some interesting anecdotal info in the form of pictures, check your email.
ReplyDeleteHi Jason,
ReplyDeleteHow did you configure the vol study on TOS to plot IV/HV on the same chart?
For some reason the RMBS 17 puts are up today so sold more for 97 and 99 cents. Seems a bit odd with the stock up today.
ReplyDeleteSold more for $1.01. That is it for me - just hope these are not being bid up because someone knows something the general market is not aware of.
ReplyDeleteAs far as I can tell from some cursory research the long awaited trial is supposed to start in early June - so maybe that is why June IV seems to be spiking. There could always be more delays,a mistrial, or a last second arbitration so plenty of uncertainty.
ReplyDeleteSold more for $1.07. Now I'm really done, and I may think about buying some the 15 put in case something really bad happens. For now will not do anything else. Jason - do you have any further take on price action in the puts today?
ReplyDeleteYou've been commenting on the MU post but I'm pretty sure you're talking about RMBS. I actually took today off and haven't seen the price action, but I've posted something similar in the past in that I don't understand or couldn't seem to find a reason for why IV keeps getting bid up when the last six months nobody has gotten paid for doing so. I get a little nervous because you tend to think somebody knows something, but IV is a sell until given a reason not to in my opinion. We've been paid enough times already that if we end up owning it a cost average price that is attractive then so be it. Here is why I'm still comfortable with that, if it does eventually take a dive, IV should shoot up even more. So I would just turn around and sell a call that should have a nice premium because of it.
ReplyDeleteI actually closed out this MU play today for a scratch trade, made a half penny after commissions. You made a good point about them being similar trades but better reward out of RMBS so didn't make sense being in both. If the NASDAQ or market in general sells of these will trade down in tandem. I've got enough exposure to RMBS.
ReplyDeleteDarrin, Dominic set the HV/IV code up for me, below is the code and directions. Beware, I've found the IV on TOS to not be reliable. Before LiveVol and iVolatility started charging for IV charts recently I would check TOS against them and they are different. If you figured out why IV is off or what adjustment we can make in the code then please let me know. I'm not interested in paying $250 a month to LiveVol.
ReplyDeleteGo to your chart settings as if you are going to add a new study and click new to create a new study… Paste the below into the dialog box after you name the new study.
#begin
declare lower;
plot IV = round(impvolatility()*100);
plot HV = round(historicalvolatility()*100);
#end