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Home › Forums › Swing Trades › Long Volatility In LNKD
Here’s my vol charts in LNKD:
A few notes here:
1. After the big gap up on earnings, the stock has been in a relatively tight trading range. About 15 points total. To put that in perspective, the range the stock was in after *last* earnings in November was about 30 points.
2. The bollinger bands are super contracted and the HV fell off a cliff. That’s because either today or Friday was when the big earnings gap stopped being in the “window” where these numbers are calculated.
3. The HV has only been this low one other time in the history of the stock, and that was back around Christmas time in 2012.
4. The stock is moving about 7 points a day. The weekly options are currently going for 7 bucks which means that vol is pretty cheap.
Now I’ve talked about the Mar2 straddle for a while now, but I want to go a little further out and buy some time.
Buy to open LNKD Mar 265 straddle for 11.25 or lower.
The reason I’m looking at next week’s options is because the front week straddle is going for about 7 bucks, so I can buy another week’s worth of volatility for an additional 4 bucks.
Simply put, LNKD has 2 weeks of trading to move 11 points. The stock is moving 7 points a day, HV is in the gutter, the stock’s in a super tight range. This has all the signs of a big move. I don’t care which way, as long as it moves.
If this trade isn’t working out by Thursday afternoon, I want out. If the stock sees a 10+ point move in a single day, I will sell options against it to reduce directional exposure.
Going to bail on this trade for a slight loss. Althought LNKD *did* move, it hasn’t moved enough to really give the straddle buy a proper “kick.” And given the way breakdown setups have been working, if this breakdown fails and the stock rips higher, the losses will become much greater.
Sell to close LNKD Mar 265 straddle @ 10.30 or higher