January 19, 2017 Trade Alert  -  Earnings Eagle  Portfolio

IBM announces earnings after the close today. The options are pricing in a 4% change in the price, and this seems to be greater than the average change over the last few announcements.  IV for the options expiring tomorrow is 61 compared to 21 for the 24Feb17 series (nearly triple), and this should give us decent prices:

BTO 8 IBM 24Feb17 162.5 puts (IBM170224P162.5)

STO 8 IBM 20Jan17 162.5 puts (IBM170120P162.5) for a debit of $1.73 (buying a calendar)

BTO 8 IBM 24Feb17 165 calls (IBM170224C165)

STO 8 IBM 20Jan17 165 calls (IBM170120C165) for a debit of $.87 (buying a calendar)

BTO 8 IBM 24Feb17 167.5 calls (IBM170224C167.5)

STO 8 IBM 20Jan17 167.5 calls (IBM170120C167.5) for a debit of $.93 (buying a calendar)

BTO 8 IBM 24Feb17 170 calls (IBM170224C170)

STO 8 IBM 20Jan17 170 calls (IBM170120C170) for a debit of $.91 (buying a calendar)

BTO 8 IBM 24Feb17 172.5 calls (IBM170224C172.5)

STO 8 IBM 20Jan17 172.5 calls (IBM170120C172.5) for a debit of $.83 (buying a calendar)

Be prepared to change these price limits by $.05 or more in order to get an execution.

Happy trading.

 

Terry