Comments
Finding opportunities for these credit spreads does not require hearing about the special event as it is happening. In fact, you should wait a day or two (perhaps even longer) for the price burst associated with the public awareness of the event to exhaust itself. On the other hand, you cannot wait too long, because the extra premium pumped into the option prices will soon dissipate.
It is important to research the background of the special event that caused the dramatic move in the stock price. Make sure it is the type of event that is unlikely to have further repercussions in the near future. The event can be either a good-news or a bad-news situation, as long as it is all of the story. Avoid events announced as “accounting irregularities” ...
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