Thursday, February 01, 2007

Google Straddles - Update

How did the GOOG straddles from yesterday do?

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GOOG closed @481.75 today, which was still about $20 away from the downside breakeven of 460.90.
GOPBO closed today @5.20 (originally 21.20)
GOPNO closed today @22.10 (originally 17.90)

So you would be down $17 on the calls, but up $4.2 on the puts, for an overall loss of $12.8, or $1280.

While I'm not absolutely certain, it seems to me that buying straddles does not seem to be a low risk play.

1 comment:

wincity said...

Agree with you. About a year ago, I experimented with a straddle in my paper trading account. I went in when KOSP was about $50. It dropped from $75 a while ago and has consolidated over $50 for at least a couple of months. I thought it'd explode up. Instead it came down. After being in the red for a long while, my straddle turned green when KOSP reached $43.

I never bothered with straddles since then.