TransitMan

Risky Trade of the Month Short Straddle in Z

NASDAQ:Z   ZILLOW GROUP INC
With the market tanking last week Zillow's IVR and IV are at 2 year highs with price in a weekly support zone of 37.75 to 40.
Weekly Linear Regression Slope(LRS) looks to be hitting a bottom with the Daily LRS showing divergence. Obvious risky play due to market conditions
As of Friday selling price of $5.50 on the 33d 40 p/c straddle leaves room for error and a quick profit taking if IV and VIX drop this week.
Tasty Stats POP 52% P50 52% Delta 10 Theta 7.50
In this last few weeks before earnings announce scheduled ~Nov 5 would not expect any significant IV drop. If I had this on I would pull it within a week or so - Theta should get over 10% max by then. As if anyone knows what any price will do I guess it will continue down - though it has contracted (weekly range) for the last two weeks it is still in a wide range (with daily increasing) and the ADX is clearly still in trendy territory. Volume indicators IIX Intraday intensity, VFI Volume Flow and OBV all show bear strength (more so weekly). Anyhow good luck with it if open!
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TransitMan Tom1trader
@Tom1trader, Thanks for the reply Tom for sure this is a quick short term volatility play with a nimble entry depending on market conditions early this week One could also use an Iron Fly strategy to mitigate risk here but it drops the theta to 1.5 or so making it a longer term hold
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Tom1trader TransitMan
@TransitMan, Due to account size it would be an iron fly or diagonal iron fly (longs out further) for me. I tend to study a lot and place only a few trades. Have not looked at Zillow at all and surprised at its option liquidity - adding it to my base (all strategies) watch list. You might like the tastytrade discussion group on facebook if you spend any time there. link: https://www.facebook.com/groups/899501033453522/. Keep smiling, turning in here.
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