Home › Forums › Trading Earnings Live › Iron Condor in IBM
- This topic has 1 reply, 1 voice, and was last updated 6 years, 10 months ago by Steven Place.
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July 18, 2016 at 3:07 pm #6465Steven PlaceKeymaster
IBM was parabolic just a few days ago. That means a lot of energy was spent getting to these levels, meaning the buyers have already started to price in some good news. Implied vol is sitting at 26% which isn’t super rich but odds are it’ll come back below 20% after the earnings event.
Now this is crazy. Past 10 earnings events have all had negative reactions. I don’t think I’ve ever seen that before.
Average move is around 4%, with a max squeeze aftermarket of -7.5%. I do think IBM is done with its downside surprises and a lot of weak hands were already washed out at the end of 2015.
So with a price of 159.73, a max move of 7% would be 11 points.
Here’s the trade I’m taking.
EarningsTrades LIVE Order Ticket Type Asset Duration Strike C/P BTO IBM Sep 180 Call STO IBM Sep 175 Call STO IBM Sep 140 Put BTO IBM Sep 135 Put Total Credit: 0.55 Now what I’m going to do is have two separate closing orders:
BTC IBM Sep 140/135 put spread @0.05
BTC IBM Sep 175/180 call spread @0.05Odds are at least one of those will fill tomorrow.
If we see a hard gap and continuation tomorrow, I”ll defend the trade by opening up another round of spreads. So, for example, if IBM gaps down hard then I’ll close out the bear call spreads and open up a new round at lower strikes. If we end up seeing massive movement, I’ll buy either the 135 put or 180 call to cut directional exposure and manage the trade over the next 2 weeks or so.
Odds are we see a gap, probably reversion, and we’re able to exit this trade out around a 0.20 debit.
- This topic was modified 6 years, 10 months ago by Steven Place.
- This topic was modified 6 years, 10 months ago by Steven Place. Reason: changed order ticket title
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You must be logged in to view attached files.July 21, 2016 at 9:39 am #6524Steven PlaceKeymasterTaking profits on this.
You can close the put spread for about 0.16
You can close the call spread for about 0.10
So net debit will be 0.26
IncomeLab Order Ticket Type Asset Duration Strike C/P STC IBM Sep 180 Call BTC IBM Sep 175 Call BTC IBM Sep 140 Put STC IBM Sep 135 Put Total Debit: 0.26 - This reply was modified 6 years, 10 months ago by Steven Place. Reason: flipped BTO/BTC column
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