NaughtyPines

TRADE IDEA: MON APRIL 15TH 76.5/81/93.5/98 IRON CONDOR

NYSE:MON   MONSANTO CO NEW
MON announces earnings on Wednesday before market open, so look to put on your play on Tuesday in the waning hours and minutes of the NY session. As with all earnings plays, you may have to tweak your strikes somewhat, depending on how MON moves running into the end of the session.

Here are the metrics for this defined risk setup:

Probability of Profit: 69%
Max Profit: $63/contract
Buying Power Effect/Max Loss: $387/contract

Alternatively, you can go short strangle:

MON April 15th 81/93.5 short strangle
Probability of Profit: 72%
Max Profit/Buying Power Effect: $99/~$1140/contract

Notes: Because we're just at the beginning of earnings season, I'm looking to manage my capital a bit more efficiently here and will probably use the iron condor because it's defined risk and the per contract buying power effect is easier to swallow than that of the short strangle ... . Additionally, the broad market is in a low volatility environment here, and I don't want to have a bunch of buying power tied up with earnings plays in the event we get a volatility pop such that I can wade back into 45 DTE             index ETF setups.


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