On March 13th, 2008, ChartBender's Real-time IV Top 20 report identified a straddle that was cheap on a relative basis. The trade was the GIGM April 17.5 straddle. At that time, the trade's fair value was $2.78. Within two days, the trade closed the day a full $1.00 higher for a 35% gain.
The Top 20 Report directs one's attention to the ideas that warrant further research, thereby saving time and helping the trader seize opportunities.
What did the trader find out about GIGM upon looking closer? The stock's daily chart on 3/13 conveyed that the stock was beginning a volatility break-out according to a set of daily bollinger bands. Nevertheless, the implied volatility for the options was still low. This incongruous scenario represented a meaningful opportunity. Shortly thereafter, GIGM experienced rapid price deterioration and the option IV jumped like a startled kitten. The trade's value bumped up a full buck. See the full 3/13 report here: Full ReportSign up and get the report emailed to you the moment the ideas are generated.
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