An earnings trade in Mosaic

Here is a trade that I have put on for earnings this week in $MOS. This trade involves Options from 2 different chains and has a Bearish bias. Here are the specifics:

Long the March 28 weekly 57.5 Put
Long the March 28 weekly 52.5 Put
Short the March 28 weekly 55 Put
Short the April 55 Put

This was done for a .14 credit today. So, how does this trade work on a price move? Let’s take a look at a few scenarios:

#1
Price moves up to $60 & holds the gains after earnings. March Put pieces lose most value post-earnings (& lose all after Thursday expiration) & would try to get whatever value from long 57.5 Put I can. I would ride the short April Put for a few days. The credit is part of the gain.

#2
Price moves down to $55 & holds steady there after earnings. I would sell the March Put spread/pieces post-earnings (would lose all value after Thursday expiration). I would evaluate the short April Put for a few days.

#3
Price goes nowhere after earnings. March Put pieces lose most value post-earnings (& lose all after Thursday expiration). I would likely ride the short April Put for a few days. The credit is part of the gain.

One thought on “An earnings trade in Mosaic

  1. Looks like it is scenario #1 for the post-earnings move in $MOS so the credit is my gain so far. I will ride the S Apr Put for a while.

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