BY ANDREW GIOVINAZZI
June 14, 2024
Yo Pit Crazies,
If you are not set up for our OP Event in July next month you are missing out. 1 on1 attention for a whole week! A $10000 value for a fraction of the cost! Licia, Voz, Mark, Frank, Griff and me, Vol Man.
All time highs and no one on Fintwit can believe it. Lots of stocks are languishing. One of them is CVS Corp (Ticker: CVS). There are some concerns about Medicare reimbursements and the pharmacy business in general is under margin pressure. Big City pharmacies are shutting doors because of insane theft laws which makes stealing not a crime.
Anyway, the chart below tells the story. Last year a $120 stock is now $60. WalgreensBoots Alliance $55 to $15. Just terrible for two great franchises.
But this post is about when a cheap option is a cheap option.
Check that out here.
Realized Volatility gives a good impression about what to expect
20 day realized volatility is the impression of how the stock has moved over the last 20 trading days. CVS had a huge drop but the last gap is now out of the calculation. I drew a line under the realized vol on the 1 year chart for the option cost or implied volatility.
CVS 1 year chart with 20 day realized vol on the bottom
Right now calls are very cheap. Licia Leslie recently rode them to success in Option Shopper. I think they could be a do over and I will look at them for my Pro Students today.
It is easier for a cheap option to become a big option. Remember that.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain