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Adobe (NASDAQ:ADBE) stock gained 0.84% after reporting better-than-expected quarterly earnings although its estimate for a revenue rise in its digital media unit for the current quarter suggested a slowing pace of growth.
We’re looking for sideways/higher price action after a big strong earnings report.
We’re going to sell 275P in OCT cycle and buy 275P in NOV cycle.
This trade takes advantage of premium decay in the options that we’re selling as they will lose value faster than the options that we’re buying.If the stock makes a sharp move in either direction, we’ll add another round of ATM calendars.
We’ll aim to capture 20% return on risk and our stop would be a loss of about 25-30% of margin.
Order Ticket Type Asset Duration Strike C/P Sell To Open ADBE 19OCT 18 275 Put Buy To Open ADBE 16NOV 18 275 Put Total Debit: 2.50 Risk Profile:
We’re at a planned adjustment point with ADBE trading around 264
We’re going to add another round of an OCT/NOV Put calendar, centered at 260 strike
Order Ticket Type Asset Duration Strike C/P Sell To Open ADBE 19OCT 18 260 Put Buy To Open ADBE 16NOV 18 260 Put Total Debit: 2.60 Risk Profile:
We’re still aiming to make about 20-25% return on risk. If we see a move outside of the tent (see above), we’ll consider stopping out or rolling either 260 or 275 put in the direction of the move.
We’re going to take a small winner here with 16 days to expiration. We have 2 Put Calendars that we’re closing:
OCT/NOV 260 Put Calendar:
Order Ticket Type Asset Duration Strike C/P Buy To Close ADBE 19OCT 18 260 Put Sell To Close ADBE 16NOV 18 260 Put Total Credit: 2.30 OCT/NOV 275 Put Calendar:
Order Ticket Type Asset Duration Strike C/P Buy To Close ADBE 19OCT 18 275 Put Sell To Close ADBE 16NOV 18 275 Put Total Credit: 3.00
Risk Profile:
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