Option Strategies: MU, .SPX& FDX
Hello everyone! Today i want t o share some option strategies with you!
1.
Got an email from DTI Trader today and thought this info was worth sharing. In the graph below, you are looking at the S&P percentage movement every day from the past 10 years.
▫️ The dots between those two lines are the days where the S&P 500 moved less than 1%.
▫️ The dots outside of those two lines are the days where the S&P 500 moved 1% or more.
As you can see from just a quick look … the stock market is flat about 70% of the time! This basically translates to 7 out of every 10 trading days the market is stagnant ... or put another way ... the majority of the time the stock market barely moves.
If majority of the time the market barely moves, then in a stagnant market time decay favors the options seller and not the buyer. Hmmm, maybe that is why many professional and $S&P 500(.SPX)$ traders mostly prefer to sell options premium versus buy it for 0DTE and short-term DTE trades.
Food for thought ...
2.
Oh $FedEx(FDX)$ ... we meet again ... might take a pre-earnings optionselling trade
Earnings date: Tuesday June 25 after market close
Expected move: ~7% (IV below 100%)
Pre-Earnings Trade:
- Sell-to-open June 28 expiration, 1x1x2 ratio put spread (buy 245, sell 240, sell 230)
- Looking at a 290/295 call credit spread
Points to Consider:
- Expected move places downside to around 236 and upside to 271
- Previous post-earnings high at 291 and previous low at 235
- Some volume support at the 0.236 fib retracement level of 232
- Options chain data shows most OI at 235 on the put side and 265 on the call side
Note:
- Expected move percentage, downside/upside range bounds, and short strikes subject to change based on the underlying's price action into market close on Tuesday
3.
Pre-earnings optionselling trade idea on $Micron Technology(MU)$
Earnings date: Wednesday June 26 after market close
Expected move: ~7% (IV below 100%)
Pre-Earnings Trade:
- Sell-to-open June 28 expiration strangle, 105 strike put (could hedge by buying the 97 strike put) and 215 call (highly doubt MU moves 50+% post-earnings)
- Another idea on the call trade would be to trade a 1x1x2 call ratio spread (buy the 160 call, sell 165 call, sell 215 call)
Points to Consider:
- Gap at the 97 level
- Previous bottom at the 105 level
- Options chain data interestingly shows that call & put OI is heaviest at the 155 strike
Note:
- Expected move percentage, downside/upside range bounds, and short strikes subject to change based on the underlying's price action into market close on Wednesday
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