Hi Shoppers,

If a President is chosen, we will most likely witness a premium crush meaning the implied volatility will come crashing down.

If you own options this is detrimental to your position.

Here are two examples of positions I had on during a huge premium crush.

In February I sent out this order:

02.13.23 10:06 AM – Buy to open 4 TNA Feb24 41.50 calls pay $1.82 maximum $1.89 – filled $1.84

At the time the trade alert was sent, the stock was trading $40.94 and the implied volatility was 70.38.

Two days later the stock was trading $42.39 and the implied vol was 55.22.

My Feb24 41.50 calls were trading $1.90.

The stock was up $1.45 and my calls were up $.06!!!

The implied vol cratered over 15 points in two days.

And the options had over a week left until expiration!

Without that huge volatility crush those calls would have been up $.75-$.80.

My second example was actually on the same day in a different stock.

Here is the order I sent:

02.13.23 1:46 PM – Buy to open 3 AMZN Fec24 100/108 call verticals pay $2.04 maximum $2.09 – filled $2.03

At the time the order was sent the stock was trading $98.73 and the implied volatility was 42.

Two days later the stock traded up to $100.16 and the implied volatility came crashing down to a 33!!

The stock was up $1.43 and my all spread was unchanged!!!

So remember, calls don’t always go up with the stock going up.

A premium crush can kill your long positions.

Stay nimble out there!

Trade Review

Exxon Mobil (Ticker: XOM) had a complete reversal to the upside. No trade was made.

Thank You for Reading … See You Next Tuesday,

Licia Leslie