Volatility Trader Blog

As you can see from the 5 minute chart below, AUXL dipped down in the premarket to $34.50 and is currently trading at $35.63, down $0.03. 

I am watching the chart of Implied Volatility in LiveVol Pro software, pictured below.  I can see right before my eyes the IV dropping and concurrently seeing increasing profit in my Thinkorswim platform.  The horizontal line is the IV on Friday around 45%, and just above 43% this AM. 

End of day Friday we were at a $500 loss.  As of right now we’re up $812.50 for a total of up $312.50.  The conference call is scheduled to start in less than 10 minutes.  The conference call may move the underlying which is currently not moving much, but it may also remove more unknown and be another ‘Vol Event’ and help our trade.

My decision: I’ll sell half now and let the remaining half stand for now.

Stay tuned.

Friday morning we sold an Iron Condor on AUXL in anticipation of their earnings release this morning (Monday) before market open. As of 7:43 AM Monday morning the underlying has not traded any shares pre-market.  Reuters is reporting, “Q1 loss narrower than expected” at loss of $0.18 vs. an estimated loss of $0.32.

When you’re short an iron condor ‘no news is good news’.  The fact that no shares have traded premarket is a good sign to me but we’ll wait for the open to count our [drop in IV] money.

Here’s an interesting note on this trade:  Friday I checked the status of this trade between surgeries.  (Yes, I look at the market between surgery patients. No, it doesn’t affect the surgeries.)  Mid day this trade was losing over $1,300 because IV went up significantly.  We entered the trade for a credit of $1.05 per spread.  On Friday, I tried to sell an additional 25 contract spread for then current mid-price of $1.60.  That would have increased my credit to an average price of $1.325 per spread but it never executed.  Oh well, that’s part of the price for using a less liquid underlying.  At the close the spread was trading $1.25 at the mid-price (-$500).

I’ll update you some time today on the status after the market opens.