What’s the trade?
Friday 8/27 Update – Trade has been closed for a nice profit! I had to split this up into 2 separate orders to close, the call side and the put side.
- Initial Outlay in Buying Power: $500
- Collected: +$179
- Closing amount: -$97
- Profit: $82
- ROI : 16%
8/26 – Earnings for CRM was 8/25 after the bell. We sold an Iron Condor in CRM for a $179 credit. With 22 days to go, CRM remains within our strikes so we put in a GTC (good till cancelled) order for $89 . . . and wait.
With CRM trading at ~260 on 8/25
- Buy the Sept 17 240 Put
- Sell the Sept 17 245 Put
- Sell the Sept 17 280 Call
- Buy the Sept 17 285 Call
- Premium: Try to collect at least $179.
- Rationale: This is a defined risk trade. CRM has earnings after the bell on 8/25 and has a high IV Rank of 39%. After earnings, the Implied Volatility tends to go down and reduce the price of the short options you’ve sold. Max loss is 500 minus premium collected.
- Probability of making 92$: 67%
- Assumption: Neutral
- Timeframe: Overnight to 3-4 weeks