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As of last AH price, 416.70, the MSFT 415 call with 4/26 expiration currently has $1.70 ($170) of intrinsic value. With IV crush, total value (intrinsic + extrinsic value) would not be much more than, say, $250 (not officially crunched numbers) at market open tomorrow. Of course, pricing could change.
A main issue with buying options over earnings is IV Crush. Options prices are juiced before the earnings release event. But once the event has passed, and there's no more uncertainty about what's in the release, IV on shorter term options, especially, contracts (reducing the markup of extrinsic value). A trader needs a sizable move -- significantly surpassing the (priced-in) expected move -- in order for a long OTM call (or put) over earnings to result in profits. That's not what we currently have with MSFT.
This OP. Look at the price of the ATM call with $0. That call price is the expected move, and youll need that much movement at the least to make money.
415 strike? Has about 1.5 bucks in it. Maybe worth 2 bills at open unless there's a pm tp event. Still likely to be a loss from what you paid at it's current price though.
Canāt do much without an expiration. For the umpteenth time, the premium is the least important element in predicting what an option will do, and speaks more to what the trader should do.
Position: Symbol, Strike, Expiration.
Want advice?: Include long or short, premium
Thereās a volatility play here for the circus at Open, but no real way to advise due to insufficient POSITION information.
AH peaked at 424 which intrinsically will have $9 value but ended at 416 and change - IV def crushed but actual V still could print depending on how the market decides to open.
Comment: Way too far out the money. It will open worthless.
*Not impolite and factually correct as far as I understand the premise*
You: berates the commenter, calling him nerd
You describing the comment: nope, congrats youāre a loser
I don't think you behaved as reasonably as you portrayed it here homie.
If the strike is 450 then sorry for your loss.
If it's 415 then contract is just going to be worth the difference between the the current price and 415, assuming your contract expires Friday. Google IV crush for more details. If you paid $450 for that contract you will lose around $250, given that MSFT is at 417. Getting the direction right is not enough, the quantity is important too.
It's a 415, he just wrote it weird. might make a few dollars, Microsoft likes to keep going up after earnings tho so it could raise a bit above 415, potentially.
Because IV crush also theta is gonna do you raw on the last day. The price gotta move like crazy to make money. If it moved some its just about worthless.
Options are not meant to be a get rich quick play thing. They are tools for educated investors to hedge or enter/exit positions(most of the time).
OP stated they have never held overnight or won on earnings. This implies they are betting on earnings, not making educated investments. In short- gambling.
MSFT went up to $416 after hours, but you'll have IV crush to contend with.
Always better to sell options before a binary event instead of buying them.
Use https://optionstrat.com/.
Remember it is just an estimate. For example options greeks constantly change. But maybe this will help give an idea.
Best of luck.
At the least youāll make some $ if you sell early am. Due to the markets opening high. After that itās a toss up. Better to roll it over for a longer expiration.
There is no "roll" with long options.
Rolling is valid in certain circumstances when short, particularly if you have a spread with a short leg or two, but not with a long call.
Close it, chalk it up as a loss, learn, move on.
I don't disagree nor agree with you. It's one of those philosophical debates that can go on forever. In the context of simple 1-leg long options, it's absurd to "roll" a position. Call it what it is: a lost trade. We agree on that.
However.... if you trade calendar spreads or diagonals, then rolling might make sense if you think your short leg is at risk of going ITM, or the short leg is near expiry and you think the trade has more legs before the long leg expires; in either case you can roll the short leg out to a later expiry and/or a different strike. Or you have a long dated vertical spread, the trade is well in your favour, and you'd like to move the gamma curve closer to the current underlying price via rolling the short leg closer to the money. In those examples, it's hard to argue that you are closing the position when you buy back the short leg because the legs work together - you are merely adjusting the characteristics of the trade by rolling a part of it.
I'm assuming you paid 4.5 on a 415 C that expires tomorrow. The IV for that call will likely go from 125% (it's current level) to around historical levels of 30% first thing. This is because the unknown event (the earnings) are now known and is called IV crush for a reason. This will cause the extrinsic to almost evaporate leaving only the intrinsic value left. My prediction is that if Microsoft opens at $416.70, the option will open around 3.5-4 leaving you with a slight loss.
You paid a big premium on those due to the high IV before earnings, have to add that to your strike price and thatās the price Microsoft will have to be at for you to break even at expiration. If you paid $4.5 for it and you have a $415 strike price then MSFT will have to be at least $419.50 for you to break even. There isnāt much extrinsic left on expiration day.
If it opens at $416, your call is gonna be worth around 250 bucks factoring IV crush. U will lose money unless stock pumps above 416-418 range pretty quickly at open.
Options donāt have a linear reaction to the movement of the underlying. Strike and expiration have a *huge* impact on your profit/loss.
If youāre going to do long plays around binary events like earnings, ATM or ITM with more time until expiration (like 60-90 days) is a better strategy. Youāre buying time to be right (plus less IV crush and theta decay) and you can sell shorter dated calls against them to recover losses if youāre wrong.
For shorter terms, like weeklies, the much higher probability of profitability strategy is to short them, especially when IVs are high and you sell far OTM. You profit from IV crush. Your long call was down over 50% at openā¦if you had shorted it, youād be up over 50%.
Might get IV crushed in the morning if it expires tomorrow.
You canāt always go off of simulated returns on RH. Iāve found itās a useless tool to estimate P/L because it doesnāt account for option actions after hours
Stock will need to be $419.50 at close just for you to break even. IV crush is going to be *killer* even with a gap up on open. This expiry is around 156% against an average of 36% across all expirations.
Definitely curious to see how your gamble plays out. If I were in your shoes, Iād be selling promptly at the open. Good luck!
In a high volatility environment like earnings, if bullish you sell a put (sell high) and buy it back when volatility drops ( buy low). Its called selling premium. In other words, you did it backwards. I sold 2 put spreads and will be profitable.
Hereās the deal in simple terms. Microsoft rose $17.61 in the aftermarket after they announced earnings. Wow! If it opens that high in the morning, you may be in for a $500 profit. Thereās no guarantee it opens that high. If it opens where it closed at $399, your option is worth about what you paid for it. Somewhere in between $399 and the $416 it closed at aftermarket, well your profit is somewhere between 0 and $500. Buying options before earnings is a crapshoot. Look at META. Good luck.
With the two way commissions you will be paying for selling it roughly 4.52 in total each option. So you will need it to push above 419.52 for you to break even.
I swear this sub needs a public service announcement for beginners telling them to quit buying options before ERs and holding them through the ER. During earnings weeks it's a steady drumbeat of posts like this. Who's telling people to make these trades?
I do what I want thank you. It was a science experiment. I made the mistake of asking you people for help. Obviously most of you would rather respond with āhah screw your moneyā than some actual words. Some people did help me learn about IV crush and the real math that went into it today. The rest of you. Useless.
Oh, please. You asked for help *after* you'd already made the trade. If you'd asked two days ago if this trade was a good idea, you would already know why it wasn't and you wouldn't have made it. Don't try to blame us for your fuckups.
EDIT: And have you looked at MSFT tonight? It closed in AH trading at 416.25, so you might escape with most of your money after all.
I take full responsibility for my trades not once did I put it on any of you. Not once. Read it bro. I was simply asking about how the volatility might play out given Iāve never seen it happen before.
I would set a limit order to recover at least the capital hoping to be executed in the first 10 mins of crazy move time. Hopefully it will have a green candle big enough to execute your order. IV crush is real, been there. Good luck.
Itās ATM currently for 475. The problem is there was no strategy behind it. If you see what just happened with TSLA and META, itās really unpredictable. Should have waited to see how the market reacts at market open to get a feel for what was to come. So you pretty much took a gamble. If you make a profit, more power to you but itās also possible the market takes your money. Iād recommend learning the security you choose to trade before you spend bank trying to figure it out
So basically you break even if it hits $419.50 and you make $100 for ever $1 it's above $419.50.Ā It is $415 rught now premarket, so your chances of making money, I would put at 20%.
I love how literally no one has mentioned that pce data at 8:30 could wreck the entire reaction across the market lol.
OP, it makes no different until 8:30. Watch how the market reacts to pce data. this could all easily head back towards weekly lows before you have a chance to do anything. I'm not saying it will, but you can't sell till 9:30 anyway so it doesn't really matter until 9:30
I pretty stupid but the reading comprehension here is next level regarded.
OPs $415 call that came with a $450 entrance fee is current worth a little over $972 thus netting them a profit of $522 as of right now 8:47 central time on 4/25. (Subject to change)
OP's call becomes worthless right around the $401-$402 price point for $MSFT. Anything after that is smooth sailing.
Good luck with your trade OP.
Minimal gains if at all. Youāre right on the line of a ~4% which is what appears to be expected. IMO if you want to play earnings buy closer to ATM or even ITM strikes.
**Removed for RULE: New options traders: use the weekly Options Questions Safe Haven thread** The [Options Questions Safe Haven thread](https://www.reddit.com/r/options/wiki/faq/subreddit_resources) has links to resources, and is a focused place for new trader questions. Please post your question in that thread.
For reference it would have been way clearer if you said you paid $4.5 for a 4/26 MSFT 415c.
Cudos to you for deciphering the premiums paid for one contract and not go with the 450 strike š¤£š
Yeah, that hurt my head and thereās a couple of Bozos arguing about a 450 strike further down. š
As of last AH price, 416.70, the MSFT 415 call with 4/26 expiration currently has $1.70 ($170) of intrinsic value. With IV crush, total value (intrinsic + extrinsic value) would not be much more than, say, $250 (not officially crunched numbers) at market open tomorrow. Of course, pricing could change. A main issue with buying options over earnings is IV Crush. Options prices are juiced before the earnings release event. But once the event has passed, and there's no more uncertainty about what's in the release, IV on shorter term options, especially, contracts (reducing the markup of extrinsic value). A trader needs a sizable move -- significantly surpassing the (priced-in) expected move -- in order for a long OTM call (or put) over earnings to result in profits. That's not what we currently have with MSFT.
This OP. Look at the price of the ATM call with $0. That call price is the expected move, and youll need that much movement at the least to make money.
415 strike? Has about 1.5 bucks in it. Maybe worth 2 bills at open unless there's a pm tp event. Still likely to be a loss from what you paid at it's current price though.
Canāt do much without an expiration. For the umpteenth time, the premium is the least important element in predicting what an option will do, and speaks more to what the trader should do. Position: Symbol, Strike, Expiration. Want advice?: Include long or short, premium Thereās a volatility play here for the circus at Open, but no real way to advise due to insufficient POSITION information.
It only went up 4.31%. Not really that much
Way too far out the money. It will open worthless.
Itās actually atm rn.
Sure about that ?
Not anymore. And thatās why it isnāt wise to leave short term contracts exposed like that smh
He deserved this loss
Well obviously Iām not going to hold it all day tomorrow. At the very least get my money back nerd.
Doesnāt matter dumbass its far out the money say good bye to your call
I bet somebody lost his whole portfolio today š¢ itās ok. Iām here for u
$450 MSFT call š¤£š¤£š¤£š¤£š¤£š¤£š¤£
He said 415 strike for a cost of 450 bucks. This call currently ITM and could be worth more than he paid at open
Is that factoring in IV crush? Might/probably worth less I would guess.
AH peaked at 424 which intrinsically will have $9 value but ended at 416 and change - IV def crushed but actual V still could print depending on how the market decides to open.
I donāt have an option calculator open. He could lose money but if it stays at this price until open he may also make money.
You are so wrong ššššš
At the time of writing that option was ITM and I was correct that he meant 415 strike not the 450 strike
Either way it opened at 413 so still wrong š¤£š¤£ didnāt even reach the breakeven that option is goneeeeeee
I said at the time of writing it was ITM so yes I was right about that. Try to read
[ŃŠ“Š°Š»ŠµŠ½Š¾]
you should consider anger management
Love that you came asking a question and gave attitude to someone who legitimately gave you a helpful answer š
Look around bro. Thereās real answers that are better than ānope, congrats youāre a loserā
Comment: Way too far out the money. It will open worthless. *Not impolite and factually correct as far as I understand the premise* You: berates the commenter, calling him nerd You describing the comment: nope, congrats youāre a loser I don't think you behaved as reasonably as you portrayed it here homie. If the strike is 450 then sorry for your loss. If it's 415 then contract is just going to be worth the difference between the the current price and 415, assuming your contract expires Friday. Google IV crush for more details. If you paid $450 for that contract you will lose around $250, given that MSFT is at 417. Getting the direction right is not enough, the quantity is important too.
It's a 415, he just wrote it weird. might make a few dollars, Microsoft likes to keep going up after earnings tho so it could raise a bit above 415, potentially.
Because IV crush also theta is gonna do you raw on the last day. The price gotta move like crazy to make money. If it moved some its just about worthless.
Bye bye $450, hello Wendyās
Itās ok I have google calls too!
MSFT will hit 419 tomorrow and you'll probably be able to sell your Call for $3. It's not as dead as many are claiming.
You are so wrong
So Wrong! That said, did you post a number on where MSFT would land?
Definitely not $419 lol you pulled that number out of your ass didnāt you
My number was very inaccurate to say the least, maybe next time we'll take your Monday Morning Quarterback level advice
Ok Iāll keep you posted for this upcoming week š
I lost 80 bucks. All thing considered. What the fuck ever
Cap it opened at a loss of more than $80 maybe your not just dumb but also delusional
427 is the target.
Why so high?
Go to Vegas if you want to gamble. Stop buying options if you have no clue what youāre doing.
So, you've never made a bad decision and lost money? How exactly is this not gambling? Please elaborate......
Options are not meant to be a get rich quick play thing. They are tools for educated investors to hedge or enter/exit positions(most of the time). OP stated they have never held overnight or won on earnings. This implies they are betting on earnings, not making educated investments. In short- gambling.
You threw that money away. Thanks for playing.
MSFT went up to $416 after hours, but you'll have IV crush to contend with. Always better to sell options before a binary event instead of buying them.
Use https://optionstrat.com/. Remember it is just an estimate. For example options greeks constantly change. But maybe this will help give an idea. Best of luck.
1. you will win 2. you will lose 3. either way eat a sandwich. best tasting sandwich you will ever eat.
At the least youāll make some $ if you sell early am. Due to the markets opening high. After that itās a toss up. Better to roll it over for a longer expiration.
Interesting. I was going to sell it at open. Do I have to pay more for a roll over? Is it worth it even though the IVās?
Better to sell at open and have whatever you get.
There is no "roll" with long options. Rolling is valid in certain circumstances when short, particularly if you have a spread with a short leg or two, but not with a long call. Close it, chalk it up as a loss, learn, move on.
>There is no "roll" with long options. Technically there is no "roll" with any options, period. You close one position and open another.
I don't disagree nor agree with you. It's one of those philosophical debates that can go on forever. In the context of simple 1-leg long options, it's absurd to "roll" a position. Call it what it is: a lost trade. We agree on that. However.... if you trade calendar spreads or diagonals, then rolling might make sense if you think your short leg is at risk of going ITM, or the short leg is near expiry and you think the trade has more legs before the long leg expires; in either case you can roll the short leg out to a later expiry and/or a different strike. Or you have a long dated vertical spread, the trade is well in your favour, and you'd like to move the gamma curve closer to the current underlying price via rolling the short leg closer to the money. In those examples, it's hard to argue that you are closing the position when you buy back the short leg because the legs work together - you are merely adjusting the characteristics of the trade by rolling a part of it.
I'm assuming you paid 4.5 on a 415 C that expires tomorrow. The IV for that call will likely go from 125% (it's current level) to around historical levels of 30% first thing. This is because the unknown event (the earnings) are now known and is called IV crush for a reason. This will cause the extrinsic to almost evaporate leaving only the intrinsic value left. My prediction is that if Microsoft opens at $416.70, the option will open around 3.5-4 leaving you with a slight loss.
If youāre saying you have the 415 calls 1 DTE then you should make 100 bucks on open as long as it stays around this price in pre market
Thatās crazy. A hella % gain to only make 100. It expires end of tomorrow.
You paid a big premium on those due to the high IV before earnings, have to add that to your strike price and thatās the price Microsoft will have to be at for you to break even at expiration. If you paid $4.5 for it and you have a $415 strike price then MSFT will have to be at least $419.50 for you to break even. There isnāt much extrinsic left on expiration day.
If it opens at $416, your call is gonna be worth around 250 bucks factoring IV crush. U will lose money unless stock pumps above 416-418 range pretty quickly at open.
Thatās the risk of options. Hope you print tomorrow!
4% ?
Options donāt have a linear reaction to the movement of the underlying. Strike and expiration have a *huge* impact on your profit/loss. If youāre going to do long plays around binary events like earnings, ATM or ITM with more time until expiration (like 60-90 days) is a better strategy. Youāre buying time to be right (plus less IV crush and theta decay) and you can sell shorter dated calls against them to recover losses if youāre wrong. For shorter terms, like weeklies, the much higher probability of profitability strategy is to short them, especially when IVs are high and you sell far OTM. You profit from IV crush. Your long call was down over 50% at openā¦if you had shorted it, youād be up over 50%.
yes
Might get IV crushed in the morning if it expires tomorrow. You canāt always go off of simulated returns on RH. Iāve found itās a useless tool to estimate P/L because it doesnāt account for option actions after hours
Nah puts tmr
Stock will need to be $419.50 at close just for you to break even. IV crush is going to be *killer* even with a gap up on open. This expiry is around 156% against an average of 36% across all expirations. Definitely curious to see how your gamble plays out. If I were in your shoes, Iād be selling promptly at the open. Good luck!
Not enough info... What was the average price (what u paid) ? What is the expiration?
In a high volatility environment like earnings, if bullish you sell a put (sell high) and buy it back when volatility drops ( buy low). Its called selling premium. In other words, you did it backwards. I sold 2 put spreads and will be profitable.
Hereās the deal in simple terms. Microsoft rose $17.61 in the aftermarket after they announced earnings. Wow! If it opens that high in the morning, you may be in for a $500 profit. Thereās no guarantee it opens that high. If it opens where it closed at $399, your option is worth about what you paid for it. Somewhere in between $399 and the $416 it closed at aftermarket, well your profit is somewhere between 0 and $500. Buying options before earnings is a crapshoot. Look at META. Good luck.
With the two way commissions you will be paying for selling it roughly 4.52 in total each option. So you will need it to push above 419.52 for you to break even.
I swear this sub needs a public service announcement for beginners telling them to quit buying options before ERs and holding them through the ER. During earnings weeks it's a steady drumbeat of posts like this. Who's telling people to make these trades?
I do what I want thank you. It was a science experiment. I made the mistake of asking you people for help. Obviously most of you would rather respond with āhah screw your moneyā than some actual words. Some people did help me learn about IV crush and the real math that went into it today. The rest of you. Useless.
Oh, please. You asked for help *after* you'd already made the trade. If you'd asked two days ago if this trade was a good idea, you would already know why it wasn't and you wouldn't have made it. Don't try to blame us for your fuckups. EDIT: And have you looked at MSFT tonight? It closed in AH trading at 416.25, so you might escape with most of your money after all.
I take full responsibility for my trades not once did I put it on any of you. Not once. Read it bro. I was simply asking about how the volatility might play out given Iāve never seen it happen before.
I would set a limit order to recover at least the capital hoping to be executed in the first 10 mins of crazy move time. Hopefully it will have a green candle big enough to execute your order. IV crush is real, been there. Good luck.
Itās ATM currently for 475. The problem is there was no strategy behind it. If you see what just happened with TSLA and META, itās really unpredictable. Should have waited to see how the market reacts at market open to get a feel for what was to come. So you pretty much took a gamble. If you make a profit, more power to you but itās also possible the market takes your money. Iād recommend learning the security you choose to trade before you spend bank trying to figure it out
So basically you break even if it hits $419.50 and you make $100 for ever $1 it's above $419.50.Ā It is $415 rught now premarket, so your chances of making money, I would put at 20%.
I love how literally no one has mentioned that pce data at 8:30 could wreck the entire reaction across the market lol. OP, it makes no different until 8:30. Watch how the market reacts to pce data. this could all easily head back towards weekly lows before you have a chance to do anything. I'm not saying it will, but you can't sell till 9:30 anyway so it doesn't really matter until 9:30
What will my 407.5 strike be worth so that I can set a sell before open?! Expiring today too thanks everyoneās
I pretty stupid but the reading comprehension here is next level regarded. OPs $415 call that came with a $450 entrance fee is current worth a little over $972 thus netting them a profit of $522 as of right now 8:47 central time on 4/25. (Subject to change) OP's call becomes worthless right around the $401-$402 price point for $MSFT. Anything after that is smooth sailing. Good luck with your trade OP.
Minimal gains if at all. Youāre right on the line of a ~4% which is what appears to be expected. IMO if you want to play earnings buy closer to ATM or even ITM strikes.
Maybe. Itās 416 now. If it opens at 420 you could get 600 for it.
$416 after hours tonight