11-21-2013, 02:16 AM
'kevinh' pid='32207' datel Wrote:Up to you how you want to put up positions but my opinion is that long calls is a bad trade. If the stock goes straight up at .25-50 cents a day, it will crush implied volatility, so you will be losing money on both theta decay and a loss on the vol, a double whammy as your vega drops significantly. My go to trade on this has been selling otm front month calls on price spikes, and then buying the calls back as the price slides back down. With a long stock short call position, I am 100% delta hedged and am shorting vol and collecting premium. But people on this board seems to hate this trade.
Certainly not me, Kevin, athough I think it is quite likely that NQ shares will have recovered most, if not all of its MW related losses by March, so this might be one of those cases where buying OTM calls actually pays off:
- Funds are buying, especially encouraging where they have done DD in China after the MW report
- In the five months since MW to March, the company isn't sitting still
- We'll have the independent audit coming out, most likely considerably before March, so NQ could have a clean bill of health that is difficult to negate, before March