Parabolic Vol Play in PLUG

[Steven Place]

Honestly a straight short could work here, and I was looking at long puts straight up…. but I think there’s a play because of the term structure.

First the trade:

Sell to Open Mar 8 Put
Buy to Open Apr 8 Put
Total Debit: 0.50 or lower

Here’s why this trade works:

1. March vol is 210% while April is 160%. The term structure is in the favor for calendar spreads
2. It’s looking for a pullback which is a high odds bet in PLUG
3. Only 11 days left to March opex, so a ton of theta is due.

This is a fixed risk trade (no stops), and we’re looking for >50% return on our risk.

[Steven Place]

We got a pullback, but in hindsight should have just bought puts straight up as we are now at our lower breakeven.

To mitigate further downside risk, I’m going to close here for a flat trade.

[Author]

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