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📊 Earnings Edge: Diagonal Debit Dynamics - #2 Trade in 20242024 Trading Challenge Entry #2: Diary of an Option Trader 💡 Trade Overview: I noticed LLY soaring on the TradingView stock heatmap today. Observing the monthly chart of AMEX:XLE (healthcare sector), it has been mostly sideways for years. However, in the past two days, NYSE:LLY has demonstrated strong bullish movement with increasing volume, indicating a potential uptrend. I strategized to profit from a possible breakout or continued trend within an ascending triangle pattern. 📊 Option Strategy choice: Given the high IVR of 42 and an upcoming earnings report on February 6th before market, I anticipate further price rise. I pondered various strategies: Single leg call: Not preferable due to increasing breakeven with time. Naked put/credit vertical spread: Not ideal close to earnings, expecting IVR increase. OTM calendar: Avoided due to back month’s illiquidity. ATM calendar: Lower upper breakeven point was a concern. Noticing that IV was higher for the front-month compared to the back-month, likely due to the nearing earnings, I decided a diagonal put debit strategy was ideal to allow significant upside potential while benefiting from minor retracements as time progresses and speculating on an IVR increase. 📊 Diagonal put debit Position Legs: Chosen structure and execution details: Buy LLY Mar 15, 2024, 600.00 PUT at 27.48 (Quantity: 1) Sell LLY Feb 16, 2024, 610.00 PUT at 26.57 (Quantity: 1) Trade Details & Key Metrics: Symbol : LLY Date/Time : 2024-01-03 15:00 POP : 54% Required Buying Power ( Req.BP ): $1090 IVR : 44 Price : buying for $0.91 debit Front month leg : February 16 @610 x 1 PUT Back month leg : March 15 @600 x -1 PUT 📈 My Risk Tolerance: For the 2024 trading challenge (goal: FWB:12K to $30k), I’m limiting floating losses to 1.5% per position, thus not tolerating more than a $175 loss. This threshold is approximately around a 590 strike price. While I’m comfortable with a considerable upside range, the upper breakeven at front month expiration is around a 711 strike, increasing to 760 at 21 DTE. 🎯 My Profit Target: I’m aiming for about 2x the allowed loss, approximately around $300, but will consider taking profits if the price approaches the optimal equity curve point near a 650 strike. Realizing profits is always the more gratifying part of trading! ANYWAY: HIT THE 🚀 BUTTON ABOVE! This trade is part of my 2024 option trading challenge , where I aim to turn a 12k account above $30K 💰 (details in signature and my profile page) .
NYSE:LLYLong
by TanukiTrade
WDFC WD-40 Company Options Ahead of EarningsIf you haven`t sold WDFC prior to previous earnings: Then analyzing the options chain and the chart patterns of WDFC WD-40 Company prior to the earnings report this week, I would consider purchasing the 230usd strike price the money Puts with an expiration date of 2024-1-19, for a premium of approximately $7.55. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:WDFCShort
by TopgOptions
Beat the Market: How I Strangled $SAVE for Maximum Gains Technical Summary: Strategy: Strangle on SAVE stock Initial Credit: $133 (before commissions and fees) Maximum Profit: $120 Required Buying Power (req. bp.): $260 for 39 days Probability of Profit (POP): 85% IV Rank (IVR): Over 94 post-earnings Break-even points: Favorably distant due to high IVR Management opportunities: Anticipated rich rolling options in future Trade Details (2023-11-06): Call Sold: 1x SAVE 12/15/23 Call @ $0.80, Strike $15.00 Put Sold: 1x SAVE 12/15/23 Put @ $0.53, Strike $7.50 Commissions and Fees: Minor, deducted from the initial credit Alright, it's Greg, the TanukiTrader, here to give you the rundown on today's options trading escapades. I took a dive into SAVE stocks which, amidst the earnings aftermath, boasted an IV Rank over 94 due to the hefty market plunge. In the tempest of the airlines' current headwinds, staying cool was the game, and I laid out a strangle to exploit that sweet 85% probability of profit at a 1:2 required buying power ratio—a number I find particularly enticing. The break-evens are sitting pretty, giving us room to breathe, and I'm gunning for a $120 max profit while my obligations are just $260 for the remaining 39 days, thanks to that spicy high IVR. Management options down the line are looking lush, especially when it comes to rolling. On the ledger, I dispatched a $15 strike SAVE call for $0.80 and a $7.50 strike SAVE put for $0.53, bagging a cool $133 in credit upfront, minor commissions and fees notwithstanding. To wrap up today's strategy: I positioned a well-balanced strangle on SAVE stock, taking into account the industry's rough patch. My opening balance clocked in at $133 in credit, which promises a rich tapestry of rolling opportunities in the days ahead. On this fine day of November 6, 2023, I have executed the sale of one call and one put option, summing up to $133 in credit, minus the petty cash for costs. Looking forward, I foresee this position offering ample management plays.
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by TanukiTrade
PLAY Dave & Buster's Entertainment Options Ahead of EarningsAnalyzing the options chain and the chart patterns of PLAY Dave & Buster's Entertainment prior to the earnings report this week, I would consider purchasing the 43usd strike price at the money Puts with an expiration date of 2023-12-15, for a premium of approximately $2.28. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:PLAYShort
by TopgOptions
SFIX Stitch Fix Options Ahead of EarningsIf you haven`t sold SFIX after the disappointing earrings: or ahead of the previous earnings: Then analyzing the options chain and the chart patterns of SFIX Stitch Fix prior to the earnings report this week, I would consider purchasing the 4.50usd strike price Calls with an expiration date of 2023-12-15, for a premium of approximately $0.17. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:SFIXLong
by TopgOptions
WDAY Workday Options Ahead of EarningsIf you haven`t bought WDAY ahead of the previous earnings: Then analyzing the options chain and the chart patterns of WDAY Workday prior to the earnings report this week, I would consider purchasing the 230usd strike price Puts with an expiration date of 2023-12-15, for a premium of approximately $5.85. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:WDAYShort
by TopgOptions
MDT Medtronic plc Options Ahead of EarningsIf you haven`t bought the previous dip in MDT: Then analyzing the options chain and the chart patterns of MDT Medtronic plc prior to the earnings report this week, I would consider purchasing the 75usd strike price at the money Calls with an expiration date of 2023-11-24, for a premium of approximately $1.24. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NYSE:MDTLong
by TopgOptions
TWLO Twilio Options Ahead of EarningsIf you haven`t sold TWLO on this massive valuation: Then analyzing the options chain and the chart patterns of TWLO Twilio prior to the earnings report this week, I would consider purchasing the 54usd strike price at the money Puts with an expiration date of 2023-11-10, for a premium of approximately $3.20. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NYSE:TWLOShort
by TopgOptions
AMGN Amgen Options Ahead of Earnings If you haven`t sold AMGN on the HZNP deal: Then analyzing the options chain and the chart patterns of AMGN Amgen prior to the earnings report this week, I would consider purchasing the 262.5usd strike price Puts with an expiration date of 2023-11-17, for a premium of approximately $8.15. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NASDAQ:AMGNShort
by TopgOptions
MA Mastercard Incorporated Options Ahead of EarningsIf you haven`t bought MA in the Buy Area here: Then analyzing the options chain and the chart patterns of MA Mastercard Incorporated prior to the earnings report this week, I would consider purchasing the 380usd strike price Puts with an expiration date of 2024-1-19, for a premium of approximately $14.65. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NYSE:MAShort
by TopgOptions
GE General Electric Company Options Ahead of EarningsIf you haven`t bought GE ahead of the previous earnings: Then analyzing the options chain and the chart patterns of GE General Electric prior to the earnings report this week, I would consider purchasing the 105usd strike price in the money Calls with an expiration date of 2023-11-17, for a premium of approximately $5.20. If these options prove to be profitable prior to the earnings release, I would sell at least half of them. Looking forward to read your opinion about it.
NYSE:GELong
by TopgOptions