Wednesday, January 13, 2010

Alcoa Crashes and Rebounds? Straddles

Alcoa (AA) dropped 11% yesterday on perceived bad earnings news. The drop seemed exaggerated at the end of the day so I entered into a new position for January. These were the values near EOD yesterday.

It's more complicated than this, more later.


With 2 days to expiration, the January straddles are obviously an extremely risky proposition. Below are the February versions:

Computed with StraddlesCalc Tool.

This is not advice. Please do your own due diligence. Options are very dangerous and cause 100% loss.

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