#high iv

[gridironoptions-blog]

The High Drama at NQ Mobile

The Cast of Characters: 

NQ Mobile.   A High flying momentum Chinese Stock.  An IBD 50 Company.   

Muddy Waters.  A Carson Block Firm.   They Short Companies.   Accused NQ Mobile as a massive fraud and gives a target of $0.   Wrote a detailed 81 page thesis on the subject.  

NQ Mobile.   Stock Drops over 60% from $23 to $10 on Oct 24th.  Refutes Allegations and launches investigation.  Stock Rallies.  Short Squeeze.   

Muddy Waters.  On Bloomberg, Carson Block holds steady and does not back off on "Massive Fraud" statements such as a saying that 75% of NQ's revenue stream is fictitious and that NQ Mobile's biggest client is NQ Mobile.    Stock gets pressured and closes at $12.78 on November 1st.  

The Options Market.   NQ Mobile Implied Volatility skyrockets to over 200% in its option chain. 

Gridiron Options.   Perfect.   A high implied volatility environment to practice high IV strategies such as the Christmas Tree and the Jade Lizard.   

NQ Mobile.  Earnings on 11/12 After Market Close.   Gonna be a doozy.    Stock will plunge or soar depending on narrative.  

THE END?  Not even close.  

[gridironoptions-blog]

The Jade Lizard - A great new High Implied Volatility strategy that I found perusing the Tasty Treat You Tube area.  I will definitely trade this strategy. 

Here are my notes:

A Jade Lizard is a combination of selling an OTM Put and an OTM Call Spread

Needs to be done in periods of high volatility

Its a Skew Strategy taking advantage of the higher IV's of the puts, as well as the skews between the call strikes(lower strike calls have higher IV than higher strikes). 

IV needs to be over 50%

Credit needs to be greater than the width of the call spread to Setup for no risk to the upside

Management:  Go for 25% Max profit due to great AVG P/L per Day, More Winners

Part of plan is to own the stock if the trade falls below the OTM Put Strike at expiration