Yesterday, on Bloomberg TV I discussed an iron condor trade on PCLN into earnings. ?Very rarely to I like playing earnings moves. ?It can be a mess (see my AMZN trade). ?But, I thought the IV was cheap and that sometimes IV is cheap for a reason, and that the market was expecting PCLN to move like EXPE which did almost nothing. ?Watch the Video here:
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Well, the good news is that this trade ended up being a home run. ?We can see how this trade looks on the Option Montage from LivevolX
LivevolX (R) www.livevol.com
The key to this trade is that PCLN did not move very much relative to the expected straddle, and thus, the whole spread collapsed to nothing. ?In fact, I actually think traders might have oversold option IV here. ?The IV is now at a 52 week low.
The Trade:
Close this Iron Condor and look at a PCLN April Straddle. ?The April straddle is now the same price as the March weekly straddle was yesterday before the earnings announcement. ?We like buying calls, or straddles after a move like today.
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