Daily Options Report

So selling AMZN options ahead of earning proved disastrous to one's financial health for the obvious reason; the stock moved 3x the range implied by the options. And even kept going the next session.

But there's a less obvious reason why this became even uglier. Options volatility crept back up to where it was pre-earnings.

Yes, part of what goes into figuring out the expected earnings range is a built in guestimation of where volatility will drop to after the report. And AMZN did indeed drop at first, problem was the stock just kept going and going. And as we learn everywhere but TV, volatility does not always move in opposition to the stock. In fact in breakouts this is very typical. And AMZN morphed from "beat" to "total breakout" quite swiftly.

So what's next?

Well, it's likely not to rally forever. And when it stops, volatility probably declines alongside the stock. That's kind of how I'm playing it as I'm long calls near here vs. short stockand short OTM puts.