Option Strategies: DOCU
Hello everyone! Today i want to share some option strategies with you!
Idea on $Docusign(DOCU)$
Earnings date: June 6 after market close
Expected move: ~9%
Points to Consider:
- DOCU has clearly established a long-term base of support in the 35-38 range ... this would be an ideal level to target for put strikes, but unfortunately there looks to be no OI, volume, or premium for the June 7 expiration (you could go out to an expiration date farther out) - Long-term volume point-of-control at the 55 level
- Looking at a more recent timeframe, the volume point-of-control is at the 42 level - 200EMA at the 55 level, and we can see DOCU trading at that level as of Friday's close
- Expected move in the 50-60 range
- Recent past earnings moves have been below 10% +/-
- Options chain is interesting ... shows highest OI at OTM strike 62 for the call side and then highest OI at near ATM put strike of 53 with the next biggest at 47
Trade:
- The options chain is interesting. We haven't seen if the flow on the 47p, 53p, and 62c strikes are at the bid or ask. That said, our guess is that folks are betting bearish and buying a 53/47 put debit spread and either selling the 62c to add to their bearish position or buying the 62c as a hedge against their puts. That said, we could totally be wrong in our assessment.
- Understanding the information above helps us figure out what trade we want to take. If traders are selling the 47p, then we could target selling the 45 (or lower) put strike.
On the call side, since we don't know if they are buying or selling the 62c, then we might want to be more conservative and target selling the 70c to give us cushion.
- Or we could buy a 53/47 put debit spread and buy the 62c based on what the OI is telling us.
- Another idea would be to place a ratio spread trade targeting the 53/50/45 put strikes.
Lots of different ways to play DOCU for earnings.
Note: Options chain data, expected move, and trade strikes are subject to change depending on the price action of DOCU leading into market close on Thursday
Follow me to learn more about analysis!!
https://x.com/Selling4Premium
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
y