Will you trade the unsual volatility?

MaverickWealthBuilder
05-21

Several outlier options on May 20 followed several market-focused events.

$Li Auto(LI)$ reported Q1 earnings. It turned out to be a big miss on the profit side of the equation, panicking investors in a thunderous way, with the stock dropping will the $21 position, hence the massive unwinding of the $23 (current week to expiration) CALL options.

$Hims & Hers Health Inc.( HIMS)$ also shot up nearly 30% on the launch of a weight-loss pill that's 80% cheaper than Eli Lilly's, while the IV of Call, which expires at 19 this week, spiked to 193% as more speculative money joined in.

Also, the meme ticker continues, $Faraday Future (FFIE)$ After topping out at more than 50 times, its single-day volatility can still reach triple digits. At the current price of $1.80, the week-to-date put is actually $0.20, the $6 Call is actually $0.60, and the $7 Call is $0.45, and the excessively high IV has attracted a lot of investors who are shorting volatility.

Instead, $Nvidia (NVDA)$ is facing Investors have begun to bet bullishly with a bias toward earnings, with shares reaching a high of $950 before the report, but market expectations for the volatility of the report aren't as high as they were before, with an overall IV Rank of just 61.66%, much lower than what has been seen in previous earnings reports.Several outlier options on May 20 followed several market-focused events.

How to Profit from IV Crush in Earnings Season?
During earnings season, IV Crush refers to the sharp decline in implied volatility (IV) after a company's earnings report. Before earnings, IV rises due to uncertainty about the outcome, causing option prices to increase. After the earnings release, this uncertainty dissipates, leading to a rapid drop in IV. This decline impacts options prices, often causing them to decrease even if the stock price moves favorably. ----------------- How to take advantage of IV crush in earnings season? Share your experiences!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment