What are your options - IBM earnings

Reason

High Implied Volatility (IV) due to numbers out on 19th July after market close

Expectation

Limited movement in IBM shares after releasing the figures and imploding IV

BEPs on expiry

Profit between $127.82 and $140.18

Max Risk

If you get a premium of $1.18 the max risk/loss would be $5 - $1.18 = $3.82 per share. 1 contract = 100 shares. Max Risk/Loss = $3.82 * 100 = $382.

If you were to perform such a trade it is good practice to wait until 1 to 4 hours before market close and try to get at least 1.50 credit, in order to maintain a good risk/reward-ration. The higher credit receive, the less risk you take.

For Who?

Only for traders/investors to adhere to the view that the numbers will not cause a move outside the expected move in the share price of IBM.

Trade set up

Sell the Iron Condor in the last 1 – 4 hours of trading on Wednesday 19th for around $ 1,45 - $1,50 (stagger in case of bigger positions). The more you can receive the more you limit your risk.

Closing

A GTC (Good Till Cancelled) order to close the position at $0,30 (stagger in case of bigger positions)

Emergency

If there is a big move in the underlying outside the bandwidth of the long strikes, monitor closely and close position latest on the 21th of July 2- 4 hours before expiry

Probability of Profit

60.77%
(on expiration, based on delta's of the short positions)

Expected Move

for 21th July ’23, based on ATM straddle: +/- $xx.xx

IV Rank

33.64%