TRADING IDEA: LULU APRIL 8TH 54/68.5 SHORT STRANGLE
I'm going to go with a nondirectional bias here (pretty much always do).
Here are the metrics for both a run of the mill one standard deviation short strangle, as well as an iron condor:
April 8th 54/68.5 short strangle
Probability of Profit: 70%
Max Profit: 1.30/contract ($130)
Buying Power Effect/Max Risk: ~$616/undefined
Break Evens: 55.30/67.20
April 15 50/54/68.5/72.5 iron condor
Probability of Profit: 68%
Max Profit: 1.00/contract ($100)
Buying Power Effect/Max Risk: $301/contract
Break Evens: 53.01/69.49
Notes: I had to go a touch farther out in time for the iron condor to get the long options strikes I wanted, but it'll still yield about $100/contract ... . Look to take either setup off at 50% max profit on the volatility contraction that is likely to occur post earnings.
Here are the metrics for both a run of the mill one standard deviation short strangle, as well as an iron condor:
April 8th 54/68.5 short strangle
Probability of Profit: 70%
Max Profit: 1.30/contract ($130)
Buying Power Effect/Max Risk: ~$616/undefined
Break Evens: 55.30/67.20
April 15 50/54/68.5/72.5 iron condor
Probability of Profit: 68%
Max Profit: 1.00/contract ($100)
Buying Power Effect/Max Risk: $301/contract
Break Evens: 53.01/69.49
Notes: I had to go a touch farther out in time for the iron condor to get the long options strikes I wanted, but it'll still yield about $100/contract ... . Look to take either setup off at 50% max profit on the volatility contraction that is likely to occur post earnings.
تعليق:
Had to tweak the setup slightly to a 54/68 (same expiry). Filled for a 1.30 credit ($130)/contract.
