THE WEEK AHEAD: HD, HPQ EARNINGS; ASHR, GDXJ, EEM PREMIUM
EARNINGS:
HD (33/24) announces earnings on Tuesday before market open; HPQ (68/38), Thursday after market close.
Although the rank/implied metrics are less than stellar, pictured here is an HD June 21st 180/185/200/205 iron condor paying 2.13 (1.06 at 50 max), expected move break evens, and delta/theta metrics of -2.22/2.96.
Alternative Trades:
June 21st 180/205 short strangle, 2.48 credit (1.24 at 50 max), one standard deviation move break evens, 4.33/9.35 delta/theta metrics.
HPQ is a bit hard to work with given its size, which imply that the only way you'll get paid to play is via short straddle. The June 21st 19 is paying 1.60 (.40 at 25 max), with expected move break evens and delta/theta metrics of -5.00/2.23.
Alternative Trades:
June 21st 18 short put (bullish assumption; potential acquisition play), .45 credit, 29.78 delta, cost basis of 17.55 if assigned (a 7.9% discount over where the stock was trading at Friday close).
EXCHANGE-TRADED FUNDS SORTED BY RANK/IMPLIED
Top 5 By Rank: ASHR (57/30), GDXJ (50/28), EEM (41/21), GDX (40/34), SMH (37/29).
Top 5 By Implied: OIH (34/34), EWZ (27/34), XOP (22/31), XBI (35/31), ASHR (57/30).
We're a bit close in time for June setups (33 days) and a bit far out for July (61), so would probably wait until the July monthly is closer in time in the absence of absolutely desperation to pile on theta to burn ... .
HD (33/24) announces earnings on Tuesday before market open; HPQ (68/38), Thursday after market close.
Although the rank/implied metrics are less than stellar, pictured here is an HD June 21st 180/185/200/205 iron condor paying 2.13 (1.06 at 50 max), expected move break evens, and delta/theta metrics of -2.22/2.96.
Alternative Trades:
June 21st 180/205 short strangle, 2.48 credit (1.24 at 50 max), one standard deviation move break evens, 4.33/9.35 delta/theta metrics.
HPQ is a bit hard to work with given its size, which imply that the only way you'll get paid to play is via short straddle. The June 21st 19 is paying 1.60 (.40 at 25 max), with expected move break evens and delta/theta metrics of -5.00/2.23.
Alternative Trades:
June 21st 18 short put (bullish assumption; potential acquisition play), .45 credit, 29.78 delta, cost basis of 17.55 if assigned (a 7.9% discount over where the stock was trading at Friday close).
EXCHANGE-TRADED FUNDS SORTED BY RANK/IMPLIED
Top 5 By Rank: ASHR (57/30), GDXJ (50/28), EEM (41/21), GDX (40/34), SMH (37/29).
Top 5 By Implied: OIH (34/34), EWZ (27/34), XOP (22/31), XBI (35/31), ASHR (57/30).
We're a bit close in time for June setups (33 days) and a bit far out for July (61), so would probably wait until the July monthly is closer in time in the absence of absolutely desperation to pile on theta to burn ... .
Comment:
Meant to add: The HD play is a basic bet that the underlying doesn't move much as opposed to a massive vol contraction play (since June to July vol contraction doesn't appear to be ginormous).