One of the frequent trade types that I do is a earnings trade. This is a catalyst trade meaning that an upcoming event is a real catalyst for price – so a nice move is expected. This move can obviously be down OR up so that trade design is where the focus is for me.
The $V earnings were scheduled for after hours on Wednesday, October 31, and I was interested in considering a pre-earnings trade. Here is the trade I ultimately decided on:
- I am long the November 2 weekly 140/145 Call Spread
- I am short the November 130 Put (normal monthly)
- This trade was done for a $.06 debit
Here is where price is trading at the moment:
Since the call spread expires tomorrow, the plan is to get value of it today once I feel that is has stalled. I will leave the short November Put for now (has a bid/ask of .21/.25 at the moment, gets under a dime and I close it).
Update: As of 9 am CST, I have sold the November 2w 140 Call for $2.42 leaving these pieces:
- Short November 2w 145 Call
- Short November 130 Put
- This is now considered a typical strangle, and I am short both pieces so it is a short diagonal strangle. The Call expires on Friday, tomorrow.