https://www.tradingview.com/chart/OsBXckpZ/
This is what I call a Ecalendar for pre earnings announcemnet calendar spread to take advantage of the volatility expansion that occurs somewhere from 30-45 days before an earnings binary event. CAT is one of many that pops up (the IV) like a gear tooth in a clear pattern; my goal is to place the trade before the pop and profit from the rise in premium.
For the week or three that this should approach target the ideal is no price movement - so I chose category support and resistance but in honesty the price history has little importance to me on this type of trade. The important characteristics I want are high option volume, high open interest and low premium bid/ask spread in those expiries that I may roll through before final exit (in short liquid open contracts).
Trade Price: $3.00 ($300 per contract)
My target profit for this trade: .37 ($37/contract) This is a preset closing order and is reset for that amount after rolling either leg as well.
The trade is defined risk and that is the only loss management involved (no stop loss orders).
Theta 0.62
Delta -4.21
CAT price at open of position: $124.38
This is what I call a Ecalendar for pre earnings announcemnet calendar spread to take advantage of the volatility expansion that occurs somewhere from 30-45 days before an earnings binary event. CAT is one of many that pops up (the IV) like a gear tooth in a clear pattern; my goal is to place the trade before the pop and profit from the rise in premium.
For the week or three that this should approach target the ideal is no price movement - so I chose category support and resistance but in honesty the price history has little importance to me on this type of trade. The important characteristics I want are high option volume, high open interest and low premium bid/ask spread in those expiries that I may roll through before final exit (in short liquid open contracts).
Trade Price: $3.00 ($300 per contract)
My target profit for this trade: .37 ($37/contract) This is a preset closing order and is reset for that amount after rolling either leg as well.
The trade is defined risk and that is the only loss management involved (no stop loss orders).
Theta 0.62
Delta -4.21
CAT price at open of position: $124.38
Trade active:
Oops sorry, should update if am going to share. On 9-29 rolled the short Oct 6 125P to Oct 20 for a credit of 1.04/contract making the new break-even 1.96. CAT underlying price was 125.25 (from my spreadsheet). The price has gone up some more but more importantly the IV has been jumping and will go more in the short time before earnings. Looks on track to hit target or near (could close now with about half of target and MUST close before the scheduled Earnings announcement on 10/24).
Trade closed: target reached:
This worked very well. Will be shopping for more like this.