CMG -- THE NEXT BIG EARNINGS PLAY
GOOG, NFLX, now CMG.
Earnings are to be announced in 3 days (7/21) after market close.
Expected move is currently between the 620 and 700 strikes (for 7/24 Weekly Options Expiry).
Ordinarily, the options play for earnings announcements where the IVR is 70+ is either via iron condor or naked short strangle with the short call/put strikes placed at or near the 1 SD (@ 84% POP) set up 2-3 days before the announcement.
Possible set-up: 577.5/605/717.5/747.5 IC, July 24 expiry for 6.78 credit, 74% POP, BE's at 598.22 and 724.28, BP (buying power) Effect/Max Loss -- $2322.
Alternative: 605/717.5 short strangle July 24 expiry for 10.45 credit, 76% POP, BE's at 594.55/727.95. Since risk of loss is unlimited, the BP effect varies.
Look to take off at 50% max profit upon volatility contraction post earnings and be prepared to roll for duration and credit if price movement results in a breach.
Earnings are to be announced in 3 days (7/21) after market close.
Expected move is currently between the 620 and 700 strikes (for 7/24 Weekly Options Expiry).
Ordinarily, the options play for earnings announcements where the IVR is 70+ is either via iron condor or naked short strangle with the short call/put strikes placed at or near the 1 SD (@ 84% POP) set up 2-3 days before the announcement.
Possible set-up: 577.5/605/717.5/747.5 IC, July 24 expiry for 6.78 credit, 74% POP, BE's at 598.22 and 724.28, BP (buying power) Effect/Max Loss -- $2322.
Alternative: 605/717.5 short strangle July 24 expiry for 10.45 credit, 76% POP, BE's at 594.55/727.95. Since risk of loss is unlimited, the BP effect varies.
Look to take off at 50% max profit upon volatility contraction post earnings and be prepared to roll for duration and credit if price movement results in a breach.
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