Tiered Calendar in GMCR

[Steven Place]

Massive move in GMCR on news that Coke is increasing their stake in the company. This is on top of a good earnings reaction, and the stock has moved 30 points in about a week.

It’s overbought but the news behind it should help to provide support. I’m expecting a time based consolidation for a while.

To top it all off, the implied volatility in the stock is at year lows, so calendars are a good bet.

This is a tiered trade, which means 1/3 of the position will be put on and if needed we will add to it.

Buy to open GMCR Jun/Jul 120 put calendar for 1.90

If we see a move to 113 or 127 we will add to the trade.

[Steven Place]

113 got tagged so we are adding another round of calendars.

Buy to open GMCR Jun/Jul 110 Put Calendar @ 1.80 or lower

Another round added around 107 or 122.

[Steven Place]

Going to close it out here effectively for a scratch.

What happened her eis that the implied volatility went from 36% all the way down to 31%– meaning we made money on the time decay component but lost money on the vega risk. Butterflies would have been a better choice.

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