ZION: 52.83 +7.61 (+16.83%) : ZIONS BANCORP - Yahoo! Finance
Avg Volume: 6.18M
Shares Out: 107.57M
This is an awesome example of how volatile days should be traded:
What if instead of anxiously/fevorishly trying to sell your calls on the Open spike you instead place Buy on Open Puts WAAAAAAYYYYYYYY Out of the money at "key" strike levels. For example: What price would a market PUT order to trigger at $105 strike been filled at the Open versus trying to clumsily pick a limit order to set in order to sell your calls? What about creating a Vertical Put Spread to trigger at certain levels?
No matter how you look at it the goal is to preserve the profits gained on your long held calls by the insane open. What difference does it make if you just get neutral with a corresponding PUT amount of contracts? Technically you would be even thus preserving the maximum profits of the gap open....
The issue is which order is easiest to make? The one you can place for practically nothing the night before or
- the stab in the dark limt order that may not get filled at your wish price
- or worse gets filled WAAAYYYYYY below the Open bid thus leaving major profits on the table
- or the catastrophic not get filled at all as the bid and profits quickly disapate
Regardless of the Call profits that were made; how much do you think a $105 strike PUT +ZNQMD would be worth if it did get filled at $0.05? By my math around $52 or for 10 contracts or $52,000. Well the close for +ZNQMD on 9/19/08 was $86.20 or $86,200.
BUY 10 +ZNQMD if ZION >= $105 $0.05 09/19/08 $17.49 = ($67.49)
SELL 10 +ZNQMD MOC Market on close $86.20 09/19/08 $17.49 =$86,182.51
To me that makes selling those calls later in the day a WHOLE lot easier.......