EARNINGS PLAY: NFLX JULY 29TH 85.5/111 SHORT STRANGLE

17 juil. 2016

Unfortunately, the only underlying announcing earnings next week that has sufficient implied volatility to consider selling premium in is NFLX, with an implied volatility of 52%.

It announces earnings on Monday after market close, so look to put on a play some time on Monday, preferably right before the NY close.

Preliminarily (I'm checking this crap in off hours, so it's rarely spot on), here are the metrics for the two setups I would consider doing:

NFLX July 29th 85.5/111 short strangle
Probability of Profit: 74%
Max Profit: 215/contract
Max Loss: Undefined
Break Evens: 83.35/113.15

NFLX July 29th 81.5/85.5/111/115 iron condor
Probability of Profit: 70%
Max Profit: 99/contract
Max Loss: 301/contract
Break Evens: 84.51/111.99

Naturally, strikes may need to be tweaked slighly depending on price movement on Monday.

18 juil. 2016

Note

I went with the iron condor, which I got filled for .94 (94/contract) with slightly tweaked strikes (81/85/110/114). Post-announcement, price is right at my short strike ... .

19 juil. 2016

Note

Out of the put side for a .02 debit -- near max profit; will take the put side off for scratch if I get a chance ... . Just going to leave it there for now and see what happens.

19 juil. 2016

Note

Hanging on to 85 ... by a thread. Lol.

21 juil. 2016

Note

At first I thought I would shoot for taking off the put side (81/85) for scratch, having gotten nearly max profit out of the call side. However, with price moving up here, I think I'm going to go for broke and shoot for near max on the put side as well (naturally, keeping an eye on it).

23 juil. 2016

Note

Ugh. Price never stays exactly where you want it to. If price is "too close for comfort" on Tuesday, I'll roll the short put side out and sell a short call strike side against for a credit that exceeds the cost of the roll.

25 juil. 2016

Trade fermée manuellement

Covered the put side for a .34/contract debit. Here's the whole chain: Opening: NFLX July 29th 81/85/110/114 for a .94 credit/contract. Closing: Call side for a .02/contract debit. Closing: Put side for a .34 debit. Net profit: 49.82/contract after fees.