January 19, 2021 Terry’s Tips Trade Alert – Earnings  Eagle Portfolio

We are opening our first trades in the 2021 version of Earnings Eagle on Procter & Gamble (PG), which reports earnings before the open tomorrow. The options market is pricing in a post-earnings move that is greater than the historical average. We are using all puts as the implied volatilities for 22Jan puts are significantly higher than those for the calls:

BTO 3 PG 19Feb21 134 puts (TGT210219P134)
STO 3 PG 22Jan21 134 puts (TGT210122P134) for a debit of $1.50 (buying a calendar)

BTO 3 PG 19Feb21 132 puts (TGT210219P132)
STO 3 PG 22Jan21 132 puts (TGT210122P132) for a debit of $1.55 (buying a calendar)

BTO 3 PG 19Feb21 130 puts (TGT210219P130)
STO 3 PG 22Jan21 130 puts (TGT210122P130) for a debit of $1.40 (buying a calendar)

BTO 3 PG 19Feb21 135 puts (TGT210219P135)
STO 3 PG 22Jan21 135 puts (TGT210122P135) for a debit of $1.45 (buying a calendar)

BTO 3 PG 19Feb21 137 puts (TGT210219P137)
STO 3 PG 22Jan21 137 puts (TGT210122P137) for a debit of $1.20 (buying a calendar)

BTO 3 PG 19Feb21 138 puts (TGT210219P138)
STO 3 PG 22Jan21 138 puts (TGT210122P138) for a debit of $1.00 (buying a calendar)
 

Be prepared to change this (these) price limit(s) by $.05 or more in order to get an execution.

Happy trading.

Terry