To The Moon

Hello everyone! Today i want to share some option stratgies with you!

1.

Pre-earnings trade idea on: $PDD Holdings Inc(PDD)$

Earnings date: Monday, Aug 26 before market open

Expected move: ~8%

Trade Idea:

- Sell-to-open a cash-secured put, Aug 30 expiration, 108 strike

- Could turn this trade into a strangle and sell the 200 call strike, but naked calls are very risky, so might want to do a spread on it to hedge just in case

Points to Consider:

- Expected move places downside to 128 and upside to 150 (subject to change based on today's closing price)

- Short put strike target is 2X+ the expected move, whereas the short call strike target would be a 40+% upside move, which seems probabilistically unlikely since that is such a big move ... however, the issue is that PDD releases earnings on a Monday, which opens up the rest of the week for it to cumulatively make a 40% move

- Volume point-of-control and strong volume resistance around the 144 level, but not much past that if 150 is breached

- Options chain shows a lot more activity on the call side of the trade, especially that 160 strike (no way to know if this activity is buying or selling, but worth pointing out)

Post-Trade Actions:

- The put is cash-secured and the goal is assignment of shares at that price; however, if you are trading naked and don't want shares, then either close for a loss or roll down-and-out if the strike is breached

- The call would be a naked trade, and with plenty of time left in the week for the strike to be exposed to getting breached, it might be more prudent to hedge with a spread ... otherwise, you have to watch the trade very closely if the price moves up post-earnings ... if you can close the call side of the trade in profit thanks to IV crush, then take it.

2.

We are taking an optionselling trade on $Salesforce.com(CRM)$ for earnings this week. We don't think it will repeat that ~20% drop from last earnings, but we will start the trade more conservatively.

Trade: Sell-to-open cash-secured put, Aug 30 expiration, 225 strike

Earnings Date: Wednesday, Aug 28 after market close

Expected Move: ~7%

Depending on how the price action plays out during the week, we might roll up the strike as high as 235 or 240 to capture more premium. That would position us 1) just below the expected move range, 2) near the bottom of the recent big dip in early August where there also happens to be a solid volume support bar, 3) just below the volume point-of-control. Depending on how the buying/selling flow shapes up this week, we might buy a weekly lotto call to play any potential post-earnings upside move.

* Note: This trade is for assignment. We lost shares at 262 and wouldn't mind getting it back. That said, we would be comfortable targeting that 225 strike for a naked put.

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