Hello everyone! Today i want to share some option strategies with you!
1.
Hmmm … 50 bps over 25 bps expected … trying to figure out if this is good or not longer term for stock market reaction based on the implications of this decision for 50 over 25 rate cut.
Wonder if the FED is simply playing catch-up since it has been very conservative in past rate cut decisions when economic data was already showing signs of improvement (inflation, earnings, etc.) considering jobs numbers.
Camp still looks mixed with some "experts" saying this is a good thing for the market while others disagree. We shall find out. Let's hear what J Pow has to say and see how the market reacts today and over the coming days. $S&P 500(.SPX)$
2.
Pre-earnings trade idea on: $FedEx(FDX)$
Earnings date: Thursday, Sept. 19 after market close
Expected move: 6.5%
Pre-Earnings Trade Ideas:
- Strangle = Sell-to-open a cash-secured put at 255 strike (or lower) and a naked call at 360 strike (or higher), Sept 20 expiration
- Iron Condor = Sell-to-open a 340/350 call credit spread and 255/245 put credit spread, Sept 20 expiration
Points to Consider:
- Expected move places downside to 279 and upside to 318 (based on today's closing price)
- Strong volume support and point-of-control around the 250 level
- Big gap between current price and the 255 level
- 200EMA at the 268 level
- FDX has had moves larger than the expected move in the past, and in addition the past three earnings releases have produced large gapped moves each time, hence gap risk is most likely high on this trade for earnings
- Daily chart looks like its primed for a drop, but that is not guaranteed ... FDX could also easily trade flat or go up for earnings based on how institutional traders react to the earnings results and guidance
- If it looks likely to take a dump, then could go more aggressive on the strikes for the call credit spread and buy a put debit spread instead of selling the credit spread
- Highly doubt FDX produces a 20% upside move to 360 on the [Fri]day of expiration if it closes around 300 (Thursday) before earnings in after-hours
- What we are looking for is IV crush as long as FDX does not breach our short strikes
Note: Selected strikes and expected move levels subject to change depending on price action leading into earnings tomorrow.
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