Market comments 20220413

Complacency on steroids today... in my opinion. The volatility dropped a fair bit, the market jumped, but there is chaos out there. On days like today it's best to close our short options to free up capital and re-load when the right opportunity comes.

So what's my trade for today?

#MS ( #MorganStanley ). It's an earnings play that is highly risky and must be avoided for most stocks.

So why did I jump into it?

Because it's a major bank and the expected move is relatively small.

To minimise the risk, I went significantly further from the current stock price than the expected move.

After earnings the volatility normally drops instantly making the option prices also drop so if there is no outlier move in this stock then I should be able to close this deal within 24 hours.

Read more about the volatility here:

https://www.tycoonitos.com/community/stock-options/volatility-explained