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UDAY_C_Santhakumar
Aug 10, 2020 2:58 PM

$CVS - setting up nicely for an explosive move.  Long

NYSE:CVS1D
CVS Health CorporationNYSE

Description

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Squeezing here.
1. IVP - 11%
2. IV - 29%

The breakout can be significant.

The options are a bit manipulated. So, build your position accordingly.

Buy the Volatility here. Spreads such as Back Ratio Spread, Buying Iron Condor / Iron Fly.

Below is an example.

For less experienced trader
BUY +1 IRON CONDOR CVS 100 (Weeklys) 11 SEP 20 65.5/69.5/65.5/61.5 CALL/PUT @2.50 LMT

For an experienced trader
BUY +1 1/1/-1 CUSTOM CVS 100 (Weeklys) 11 SEP 20/11 SEP 20/11 SEP 20 65/65/61 CALL/PUT/PUT @3.20 LMT

Both are done for a debit. Strictly close 1 week prior to expiration.

The risk is, This stock can squeeze for a month. However I feel like this will explode in 2 weeks.

Comment

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Be ready to roll the trade next week. Rolling each leg at optimal time.

Comment

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Profitable on both examples. I am not going to carry this to next week. Low probability to make any money next week.


Good Luck.
Beyond Technical Analysisucsgears
Comments
vk030172
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Looks like the chart went the opposite way.
UDAY_C_Santhakumar
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@vk030172, Didnt lose $$$ even it went the other way
A-shot
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Actually, can you take a look at Visa? Seems to be in a similar fashion poised - Mastercard already ran a bit
UDAY_C_Santhakumar
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@2use, Yeah, noticed that on MA and V. The fact that V is not moving for 2 month, will get it into a Weekly squeeze scenario, so playing it after the it triggers would be good.
A-shot
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I checked on my signals and indicators and must confess- looks good indeed! A bit too soon but i started a position in it. Thanx for the reminder!
dave.seremek
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Gears, this is an interesting analysis. Does this same analysis apply to battered competitor WBA?
UDAY_C_Santhakumar
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@Dave.seremek, You can use the same trading structure. As both are in a bad squeeze.

WBA is weaker than CVS. But a long move on WBA would imply a bigger run than CVS. Options are a bit more expensive, so a neutral strategy is not good. Plant the skew in your favor, it would be easier to manage. Sell high IV, Buy Low IV in an option spread leg.
UDAY_C_Santhakumar
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@ucsgears, bad - I meant tight
dave.seremek
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@ucsgears, Thanks you.
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