Sunday, November 29, 2009
Implied Volatility = Too Low
Last week, on Tuesday or Wednesday, I took at look at the options of old friend FAZ - the triple financial short ETF.
The underlying was around 19.50 and the the Jan 20 calls were offered at 2.15 I believe.
I scratched my head in disbelief. What was I missing?
Yeah, a long Thanksgiving week of decay was imminent; and yeah January was a short expiration month (the 15th) but still....what was my risk here?
Two stinkin' dollars!
I was just about to buy a few handfuls of them but, alas, I did not.
Then on Friday they closed at 3.10.
And there's still a VERY LONG 47 days until expiry!
Get yourselves some options while they're cheap.