Implied Volatility will immediately shrink often know as
“volatility crash”. The options premium will lose its value
so much that if there is no substantial movement in the
stock price to push the option deep in-the-money to cover
the losses, even it gapped in your favour, and you can still
lose money.
2. Gambling – betting on earnings is all based on
predictions just like playing baccarat, you bet on either
banker or player base on intuition or gut feeling. Even with
positive earnings the stock still can go down, past earnings
does not guarantee that the same outcome the next
round.
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