THE WEEK AHEAD: DIS, AKS, P, TSLA, TWTR, X, MU, DISH
With most of the earnings heavy hitters in the rear view mirror, there isn't much to trade this week of quality from an earnings announcement volatility contraction standpoint, with DIS being the standout name.
DIS announces on Tuesday after market close with a 30-day implied volatility of 25%, which is in the upper half of its 52-week range. The May 18th 96/97 16 delta short strangle pays .97 with a 75% probably of profit, which isn't horrible, but I'd rather have a background implied above 50%.
One underlying that I don't usually trade earnings that caught my eye, however, was DISH, with an implied of >50%, which is at the top end of its 52-week range. It announces earnings on Tuesday before market open. You can naturally play it for earnings-related vol contraction (the May 18th 20-delta 30.5/37.5 short strangle's paying .88), but the chart may suggest taking a directional shot instead. I'll set out several bullish assumption plays in a separate post that would take advantage of its "being on its butt-dom."
On the slip side of the coin, there are several individual names that have that ~50% metric I'm looking for that have already announced and that may be worth nondirectional plays that are just as -- if not more productive -- than the Disney earnings play if set up in the June monthly. Here they are, ranked by their 30-day implied volatility percentages: AKS (65.5) (straddle), P (59.2) (straddle), TSLA (53.9) (strangle), TWTR (49.5) (strangle), X (48.6) (strangle), and MU (47) (strangle).*
On the exchange-traded fund front, not much is attractive, having all fallen below 35% 30-day implied: XOP (29.3), EWZ (28.5), SMH (26.9), EWW (24.9), FXI (22.8), so I'm unlikely to consider putting on a play in one of those unless something substantially changes as the week evolves. Moreover, my tendency is to set those up in the monthlies nearest 45 days until expiration and June (40 days 'til) is starting to "fall out of that window," with July (75 days 'til) being too far out in time.
* -- You can naturally consider going defined risk with some of these, using iron flies instead of naked short straddles; iron condors instead of short strangles.
DIS announces on Tuesday after market close with a 30-day implied volatility of 25%, which is in the upper half of its 52-week range. The May 18th 96/97 16 delta short strangle pays .97 with a 75% probably of profit, which isn't horrible, but I'd rather have a background implied above 50%.
One underlying that I don't usually trade earnings that caught my eye, however, was DISH, with an implied of >50%, which is at the top end of its 52-week range. It announces earnings on Tuesday before market open. You can naturally play it for earnings-related vol contraction (the May 18th 20-delta 30.5/37.5 short strangle's paying .88), but the chart may suggest taking a directional shot instead. I'll set out several bullish assumption plays in a separate post that would take advantage of its "being on its butt-dom."
On the slip side of the coin, there are several individual names that have that ~50% metric I'm looking for that have already announced and that may be worth nondirectional plays that are just as -- if not more productive -- than the Disney earnings play if set up in the June monthly. Here they are, ranked by their 30-day implied volatility percentages: AKS (65.5) (straddle), P (59.2) (straddle), TSLA (53.9) (strangle), TWTR (49.5) (strangle), X (48.6) (strangle), and MU (47) (strangle).*
On the exchange-traded fund front, not much is attractive, having all fallen below 35% 30-day implied: XOP (29.3), EWZ (28.5), SMH (26.9), EWW (24.9), FXI (22.8), so I'm unlikely to consider putting on a play in one of those unless something substantially changes as the week evolves. Moreover, my tendency is to set those up in the monthlies nearest 45 days until expiration and June (40 days 'til) is starting to "fall out of that window," with July (75 days 'til) being too far out in time.
* -- You can naturally consider going defined risk with some of these, using iron flies instead of naked short straddles; iron condors instead of short strangles.