Hello everyone! Today I want to share some option strategies with you! Hope it can be helpful to you!
Closed out trades on $Salesforce.com(CRM)$ and $CorMedix Inc.(CRMD)$ to lock in profit and free up buying power for trades on $MongoDB Inc.(MDB)$ and possibly $Lululemon Athletica(LULU)$ and $Dell Technologies Inc.(DELL)$ today.
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Pulled the trigger on that big drop right now. Hopefully $MongoDB Inc.(MDB)$ recovers and doesn't drop more. Would like to think we timed our trade perfectly, but still too much time left in the trading day. Sold the put spread per our optionselling trade idea on MDB. Sep 1 exp, sold 295p, bought 250p.
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Executed the trade on $Dell Technologies Inc.(DELL)$ and lowered our limit price to 0.20 to get filled.
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Opened up this optionselling put spread trade on $Dell Technologies Inc.(DELL)$ . Trying to get it filled at 0.25/contract, but will adjust down to 0.20 if need be and try to get a fill there. Some volume support at 51/52 and expected move is ~4%.
Typically we follow our rule of selling a strike 2X the expected move range, but we're gonna break it by selling this strike slightly below the lower bound of the range (within 2X) since the underlying isn't projected to have huge volatility either way.
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Executed an optionselling trade on $Lululemon Athletica(LULU)$ to play it for earnings. Sold a call spread ... Sep 1 exp, sold 450c, bought 475c. LULU has had a hard time breaking the 395 level.
For LULU to pump 18% from its current price level and break the 450 level means it would have to report very good earnings numbers and forward guidance, and we don't see that happening with mixed strength/weakness in the retail sector.
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Lastly, I want to say that i don't trade the Iron Butterfly, but if i did here is a three-part checklist that i would use to determine if its safe to enter an iron butterfly trade:
1. Pay attention to the implied volatility (IV) of the butterfly. Do not enter the iron butterfly when IV is sky-high because there is likely to be a snapback rally. Do not enter when IV is too low because the trade is likely to have IV pop. Aim to enter the butterfly when IVs are in-between 25-75% of the 90-day mean IV.
2. Make sure the inter-month skew isn't too wide. If it is, then this is a warning sign of a breakout. Butterflies are a front-month trade, thus you want to avoid if inter-month skew is too negative as that can mean that in relative terms the front month is too high. If the inter-month skew is too positive, that is also not good considering that butterflies are a gamma trade.
3. Watch intra-month skew. When skew is high, butterflies are a very tough trade to take. When skew is low, butterflies are an easier trade to take. Note: This is only a starting point for an Iron Butterfly trade set-up checklist. That said, if all these three align, then the butterfly is probably a favorable trade to enter at that given time.
Thank you for patience! Follow me to learn more about analysis!!
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