One of the frustrating parts of option trading is dealing with other traders and their over estimation of reality.
An example is as follows.. I have 25 puts for AMZN (Amazon) The puts are for the 150 strike and AMZN is now trading around 166. There is only today and tomorrow left in these puts before they expire. These puts are now selling for between .08 / .10
So the reality is that AMZN will have to fall below 150 for these to have any value, or over 16 points in a day and a half. At this time the put is all extrinsic value and not any intrinsic value. So how it effects me as a trader, is that I have a lot of maintenance funds tied up with these and they should be selling around .01 /.02. I could then buy them and sell another position and make a little more in the last two days of this week.
Of course when I make trades that are over-inflated it is good trading, but when other try the same tactics it is 'greed & unreasonable' lol
The result is that sometimes you just have to either bite the bullet and pay the 'going rate' or as I am doing this week, say, to heck with them and just let them expire tomorrow afternoon.
2 comments:
I picked up 11 cents for NFLX $160 when it went down more than $5. Reminded me of the book of Ruth in the Old Testament; leaving some for the poor to pick up during the harvest....LOL
Hi Hannah, I like the thinking. Just take safe crumbs from around the table and let others go for the bigger faster $$$. We want safe and sane growth. Ka-ching over and over again. Tomorrow I will look at NFLX in the morning and if it is still around 175 I will probably go for the 160's also, maybe if the market is trending up i might go for the 165's. We will see.
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