What options strat would you use to play the Google Split? - futures io
futures io



What options strat would you use to play the Google Split?


Discussion in Options

Updated
    1. trending_up 218 views
    2. thumb_up 1 thanks given
    3. group 2 followers
    1. forum 1 posts
    2. attach_file 0 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 150,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

(If you already have an account, login at the top of the page)

 
Search this Thread
 

What options strat would you use to play the Google Split?

(login for full post details)
  #1 (permalink)
stillwanttodoit
Toronto Canada
 
 
Posts: 7 since Mar 2022
Thanks: 1 given, 0 received

Good Morning,

I have read on some of the threads about Google split scheduled to occur on July 15 (?).

I have been trading futures for the past three years, but never traded options before.

My question is, what is the most appropriate method of trading the GOOGL split (or any split for that matter) ?

1) call debit spread
2) poor mans CC
3) _________________?


Thank you.

Reply With Quote

Can you help answer these questions
from other members on futures io?
NT8 - Footprint Chart adding on code
NinjaTrader
NT deleting my Strategies on charts
NinjaTrader
Moving Average Price Scan
ThinkOrSwim
TOS Fold Loop to NT8 For Loop
NinjaTrader
use of Ultimate Oscillator in NT8
NinjaTrader
 
 
(login for full post details)
  #2 (permalink)
 petebaksh 
Orlando, FL
 
Experience: Advanced
Platform: Jigsaw, DAS Trader Pro
Trading: ZN, ZB, ES, Stocks, Options
 
petebaksh's Avatar
 
Posts: 3 since Sep 2021
Thanks: 4 given, 14 received

That’s going to depend a lot on how you see things playing out. It’s reasonable (based on looking at past splits on average) to think the stock may pop another 5-10, even 15% between now and then, as this would be typical based on historical comparisons. But current conditions are penalizing long ideas, so this thesis carries less weight than it would have in 2021. A split theoretically makes a stock more affordable and should stoke demand, but the mood is very sour, particularly in Tech. This makes for lower odds of the long trade working.

Then there is the historical tendency for splits to be a “sell the news” trade, where everyone has already bought ahead of the split, so they’re running for the exit on the day it starts trading lower.

To run the scenario where it could pop, I’d put on an OTM (10-15% or so) Bull Call spread if I could get a very high payout for my cost. In other words, 0.50 debit to put it on and a 5.00 payout if its right. If the market does rally, that is a reasonable target band for a trade like this.

On the other hand, you could wait for the split to occur, then put on a Bear Put spread with similar payoff characterisitics.

The thing about both trades is that they may work. The real odds of those moves might be 30% on either side (due to catalyst, a split) but your payoff is much better than 3:1. When it comes down to it, this is not much different than most other trading strategies, you have to have favorable payoffs and/or win rates, and play lots of similar events to make it work.

But these are relatively simple strategies that just barely scratch the surface of how tailored you can get with options. Hope this helps.

Reply With Quote
The following user says Thank You to petebaksh for this post:


futures io Trading Community Traders Hideout Options > What options strat would you use to play the Google Split?


Last Updated on June 12, 2022


Upcoming Webinars and Events
 

NinjaTrader Indicator Challenge!

Ongoing
     



Copyright © 2022 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada), info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts