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HD had a nice breakout and now it is starting to get a little overbought.
Next earnings report is 13NOV. We’re looking for implied volatility to rise into the earnings announcement, so we want to be long premium in the cycle that covers the event.
We also want to sell premium to help cover the cost of the premium that we’re buying.
We’re looking at an At The Money Put Calendar, selling 19OCT and buying 16NOV put at 210 strike.
Order Ticket Type Asset Duration Strike C/P Sell To Open HD 19OCT 18 210 Put Buy To Open HD 16NOV 18 210 Put Total Debit: 2.00 Risk Profile:
Our profit target is around 20% return on risk.
We will add another round of Put Calendar at 205 or 215.
Our stop will be a loss of around 30%
I’m looking to take a quick profit in this trade
Order Ticket Type Asset Duration Strike C/P Buy To Close HD 19OCT 18 210 Put Sell To Close HD 16NOV 18 210 Put Total Credit: 2.20 Risk Profile:
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