BY ANDREW GIOVINAZZI
December 12, 2024
Yo Pit Crazies,
There are two basic trades with options that traders love-
Door #1- The cheap call going to the moon
Door #2- Fading the market like it is your bi&%$ buying puts and watching them explode
For right now there is not much point in talking about door #2. Stocks have been on an AI tear in 2024 and that shows no signs of slowing down. Tesla Inc (Ticker: TSLA) is up 69% this year and ripped after the close Wednesday. AI, robots oh and self driving cars and General Motors Inc (Ticker: GM) folds its FSD program.
Funny enough GM is up 50% for the year. The difference of course is TSLA is $250 and GM is $17. When trading options, that $17 move can be worth more if I start out for .50 or $1.00 buying some calls.
That really is the rub.
What is the potential option gain?
Why do I look at implied volatility? Because the lower the implied volatility the faster the option price will move. See below:
6 month AAPL chart with 30 day IV in red
Apple Inc (Ticker: AAPL) is trading at 1 year low volatility. The stock moved $20 in 2 weeks. If you don’t know what to do, check in for a Weekly Trade today. Then you will know what to do.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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