So remember all of Friday we looked at some straddles in FXP and EEV?
So, interested in an FXP straddle? Say, the Oct. 145's with one week to go? Midpoint to midpoint, it would cost about $42.
EEV Oct 180? About $49.
I remember trying this exercise in SKF at about this point in another cycle, and it was the same thing, unreal prices. And guess what, it was a buy, you got a play in both directions.
No way, no how I'm playing these either way, but for the record, I'll take the "over".
Well guess what, Part 2. One monster rally later and the spreads turned into bargains. FXP is near 100, and EEV is 125, meaning if you bought the straddle and did nothing you are intrinsically a winner. One trading day later.
There's a lesson here somewhere....
Oh yeah. Playing volatility in the near month is about the price move in the underlying. It's not about the moves up or down in the options themselves. The premiums are going to zero on Friday, no matter what happens.Options volatility is pretty much getting slammed today across the board, but the price moves in the underlyings are so huge that, depending on the specifics, straight volatility purchases Friday at the Highest Prices Evah may very well have worked.
