As I anticipated yesterday, the market dropped today slightly, which normally also means that the VIX goes up. Higher VIX means more premium to collect for option traders.
My today's trade selection: #AMD ( #AdvancedMicroDevices )
The price dropped today a bit but not enough for me to go directional with it so I decided to sell a wide strangle with April expiry, given that the earnings is scheduled at April 26. I don't want to go into earnings with it so for this trade to succeed, the price must stay within the range.
Also, the IVR is 54.1 which is not very high for this stock but high enough for me.
Since mid-Jan, the price has been quite volatile but stayed between $100 and $135. We can see that there is a really strong support at $100 so something drastic has to happen for the stock to go below $100.
The stats
Trade Type: Short Strangle
Strike: $100 / 135
Expiry: 14 Apr
Delta: 6.5
IV Rank: 54.1
Premium: $1.99
Cap Req: $1140
Annualised Prof at Expiry: 290%
Let me know your thoughts.
What a winner!
Closed it at $1.73 for an annualised profit of 605%.
Big move today upwards so rolled up the put to Apr $105 for an additional $0.52 credit.
Total credit: $2.51.