Today I did something I rarely do... I BOUGHT an option looking for a directional move!
Quick back story, I got my start buying and trading options... WAY OUT OF THE MONEY options. You can imagine how that went! I made some big money FAST, but unfortunately I lost MORE even FASTER! It didn't take me long to realize I was on the wrong side of the trade. Plus buying way out of the money options was just plain STUPID!
However I never gave up on the idea that buying options to trade directionally could work for me. One strategy I've been looking at lately is buying further dated, deep in the money calls.
Today I bought one November $40 TWTR call. The trade cost me $725 (commissions included). I feel like this stock has been consolidating around the $43 to $45 level since the ER pop a few weeks back. Here in the past few days It's range has been especially tight. This means the implied volatility (IV) has dropped to an all-time low. (I can't take credit for the volatility information. I picked that up today thanks to OphirGottlieb.)
So, with the IV low and what I feel like is an impending move up, this was the perfect time to put my deep in the money call strategy to work.
For all you folks out there finding this blog for the time, I'm the Option Rider. I play with a wide open hand, for better or for worse! Please feel free to look through my open positions, my winners, AND my losers. Any advice, thoughts, comments or helpful tips are welcomed at firstname.lastname@example.org.