ROKU Realized Volatility is a 1 year high
ROKU realized volatility is touching a 1 year high for a 10 day average. That might not mean much to someone long at $170 but it does mean something for the volatility trader. ROKU is a vehicle for a long gamma trade for a short period of time.
Learn to manage gamma by the hold time
I have no real idea about the ROKU prospects. It has good growth but probably faces some competitive headwinds as other services come up with a new streaming suite. The fact the market took it from $170 to $107 is enough of a signal. If I want to trade the “gamma” the direction is not as important as the type of position and what it costs the holder per day. Long gamma trades should be managed by the decay dollars they cost and as long as there is a way to break even, keep the gamma because you never know what can happen.
Last Thursday’s Gold Class was on ROKU
Option Pit runs several education levels. My class was using the Edge Hunter sheet to identify volatility and then create a low theta, high contract trade with a high potential payout. I go over how to set up the trade. The idea was to accumulate long put contracts, with upside, for small dollars. It is clearly laid out in the video and an example of how Mark and I set things up.
Check out our Edge Hunter webinar on Thursday to learn how to use volatility in a proactive way.
ROKU gamma now
I like the idea of a similar trade but with the strikes moved down $30 with a little more room on the upside.
Follow Andrew@optionvol You can hear Andrew on Option Block every week.
Follow Mark@optionpit You can hear Mark on Volatility Views every week. Volatility View Crystal Ball is on Friday’s.