Option Strategies: ZS
Hello everyone! Today i want to share some option strategies with you!
1.
Pre-earnings trade idea on: $Zscaler Inc.(ZS)$
Earnings date: Tuesday, Sept 3rd after market close
Expected move: 10%
Pre-Earnings Trade Idea:
- Sell-to-open a cash-secured put, Sept 6 expiration, 160 strike [also got the 165p already in play, so am adding to the position by layering in]
- Could turn this trade into a strangle and sell the 270 call strike, but naked calls are very risky, so might want to do a spread on it to hedge/reduce risk exposure
- Speaking of spreads, also have a diagonal calendar debit spread in play [170 long strike and 210 short strike ... might roll the short strike to 215, Sept 20 expiration]
Points to Consider:
- Expected move places downside to 177 and upside to 217 (subject to change based on next week's price action and change in expected move %)
- 160 put strike is close to 2X the expected move, whereas the 270 call strike would be a 3X+ upside move
- Volume point-of-control around 180, with price action getting rejected at that volume resistance in the 200-203 range
- Much less volume resistance to 270, so this thing could fly if it has a stellar earnings report
- Solid volume support down to 155 with that level being a multiple-touch bottom
Post-Trade Actions:
- The put is cash-secured and the goal is assignment of shares at that price, but will roll down-and-out to lower entry strike if 160 gets breached badly
- The call probability of hitting 270 by Friday's close is low, but anything is possible with earnings, so if the strike is breached then will close for a loss or roll up-and-out until price action stalls out and reverses down (thus allowing us to get out of the naked call at breakeven/profit or enabling us to short the stock if we decide to take assignment to play for a pullback)
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- Alex Tan·09-02Thank you for your wonderful insights. I am literally shedding tears of happiness. All the best and good luck Luck to youLikeReport