Options Wonderland

[loanwolf]

Someone had asked about expectations of the AAPL JUL 22 weekly 405 calls for tomorrow.

I am showing these calls to have a last print of 1.41 at end of day.

There's two factors in this equation imo, time decay (theta) and implied volatility (vega), both of which add premium to the contract.

Being that now it's post earnings report and a day closer to expiration, those two factors are working against the premium now.

The implied volatility will be less, and the rate of decay will decrease as expiration nears.
JUL 22 weeklies expire this friday.

All in all I'm not sure exactly what to expect as far as predicting the price this contract will open at or trade at. There's zero intrinsic value (being currently otm) and less time value, and less volatility value, but the stock moved up big ah but is still an OTM (out of the money) contract

So, I do feel it will lose implied volatility value and time decay will decrease the premium as well.

The farther AAPL trades below 405, the lower the premium will be obviously.

I am really not sure what value will be placed on these at the open, depends where AAPL opens at.
Often times post event if the contract doesn't move to ITM (in the money) it loses value, there is still three days left for this contract to move ITM and it did trade over 400 ah so it may gain some value from close as well but pre-market activity tomorrow may tell its direction more as well.

Even tho AAPL is up some 20+ points ah, the contract is still pretty far OTM.
The 405 calls will most likely open with a very large spread.

It's an anything goes as far as tomorrows pricing even if AAPL were to open right here in 393.90 range where it last traded ah.

I think that from whatever price this opens at tomorrow, it will significantly decrease from there unless it makes a stronger move towards 400/405 range.

All I know is the factors involved in the premium (time decay and implied volatility) will be changed tomorrow being it is post earnings and closer to expiration

If someone has a more precise opinion/estimate on this contract value tomorrow morning, please chime in.

I wish I could have been more helpful