Just looking at FDX whose earnings are released BMO on Thursday. I had a calendar that is not working. I was looking to modify it when I thought it might be nice to place an inverted calendar on the stock. It's actually a gamma trade--I'm just using the credit from the inverted calendar to purchase my puts.
Now, the IV looks low, so I'm not expecting an IV crush. Rather, I'm expecting a little IV build. Also, FDX has run so much, I'm thinking that FDX might have a little pullback to the low 70s--buy the rumor, sell the news type chart. This is highly speculative, but if FDX does decline after earnings, the puts I purchased will grow and I'll earn some nice cash. So, if you need a little excitement in your life, you might want to try it.
-1 Jan 75p
+1 Oct 75p
for 2.80 credit
now, +17 Sep 75p for about 0.15 each
The whole credit leaves a .25 credit. If FDX moves below 77, you start to make money.
Exit: close long puts after earnings are released--I'll prob close the whole trade then too. I won't keep the inv. calendar on because I'm bullish on IV.
Happy Trading.
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So, I was up 240 on my puts today but couldn't get to a computer because I was watching my neighbors' kids this morning--argh! So, I decided to hold the 14 long puts as a gamble to see what happens tomorrow.
ReplyDeleteLooks like that one worked out if you got out Friday.
ReplyDelete