Selling a 1 lot at the 50 strike for 1.32 and 93 D.T.E. for an initial basis of 48.68 which is the 34 delta strike. Probability of profit is 70% and even though their customers are all addicted to the product I am not convinced I want this stock and may just treat this as a trade. A put ratio could not be placed for a credit (5 wide strikes) so this is where I will start my position. Volatility is high enough at 53% but it says earnings are July 26......since it has dropped $5 today I am assuming they have pre-announced and maybe earnings will be a non-event?? Wish me luck.
Trade closed manually:
Closed this trade today for 1.26 (a loss counting commissions Fidelity) The stock dropped a little more than I thought and with the vol expanding for earnings I think the risk is more than the put is worth. I thought the bounce and theta decay would have taken more out of it but I was wrong so scratching this one and may enter if we get a better entry after earnings.
Comment:
Not that it matters...but SBUX reported earnings and barely dropped around 50.79 but the options premium barely collapsed (1.06) for the 50 put now. I would have re-entered the trade had we fallen again or if the premium increased but no interest in trading directionally with no volatility edge in the premiums.