Glitch or just crazy IV movement? (CAR)
Today something happened that I have never seen before in my 7 years of trading options. I have been watching the short squeeze on $CAR (Avis). The hourly, daily and weekly RSI has been around 97. That’s absurdly overbought. Last Thursday I was looking at options and the premiums of course are crazy. I bought 5, $180 puts with a June expiration for $800 each. My thinking is that when the squeeze runs out of gas it could easily drop 50%. Maybe I could overcome the IV crush. I analyzed it with Xynth and it said that in those conditions $500 a share was likely the top. Wrong! Friday rolled around and it squeezed up to $600. My puts went down but not terribly. I figured it was because my puts were so far OTM. This morning $CAR shot up 20%. I thought, dang I’m going to get smoked. The numbers flashed crazy for a few minutes and then all went to zeros. I think trading was temporarily halted because the ticker quit moving. Or maybe it was a glitch. When the numbers came back the bid ask was crazy wide. Bid to ask was $300 - $2000. I thought, hmmm. So I put in a limit sell order for $1,100. After about 10 minutes I got filled at $1,200. All 5 of them! So basically in 2 days the ticker went up 30% but my put options also went up 30%. I’m not sure if the IV move is that insane of there was a glitch. Any way the stock pulled back 10% and I put a limit buy order in for 3 of the same option at $800. And got filled. Yes, I am aware that I’m playing with fire but wow that’s wild.