Options Strategist
Summary: On Tuesday, July 25th, 2023, Alphabet, Google's parent company, is set to release its earnings report after the market closes. In this article, we will discuss three potential trade setups: one bullish, one neutral, and one bearish. These setups are designed to help traders navigate the potential market reactions to GOOGL's earnings release. Our aim is to provide clear, objective insights that can assist in making informed trading decisions.
Reason | High Implied Volatility (IV) due to numbers out on 25th July after market close |
Expectation | Limited movement in GOOGL shares after releasing the figures and imploding IV |
BEPs on expiry | Profit between $114.63 and $131.37 |
Max Risk | If you get a premium of $1.37 the max risk/loss would be $5 - $1.37 = $3.63per share. 1 contract = 100 shares. Max Risk/Loss = $3.63 * 100 = $363. 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 GOOGL. |
Trade set up | Sell the Iron Condor in the last 1 – 4 hours of trading on Tuesday 25th 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 28th of July 2- 4 hours before expiry |
Probability of Profit | 61.31% |
Expected Move | for 28th July ’23, based on ATM straddle: +/- $7.25 |
IV Rank | 45.02% |
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