The biggest news today is the 35% drop in NFLX, which dragged down many of the other tech stocks.
It feels like we are just witnessing the repeat of the dotcom bubble 22 years ago.
For this reason, we have to be super careful when trading tech stocks at the moment.
What's my trade for today?
Although I generally stay clear of earnings plays, I could not resist the temptation to try my luck with #AA ( #AlcoaCorp ), which is in the aluminium production space. The stock has skyrocketed over the past few months and the IVR is also quite high. I selected the May $65 / 110 strangle. Both legs are less than 10 delta so the trade has an 85% probability of profit.
The stats
Trade Type: Short Strangle
Strike: $65 / 110
Expiry: 20 May
Delta: -8.3
IV Rank: 43.8
Premium: $1.5
Cap Req: $877
Annualised Prof at Expiry: 208%
Couple of adjustments:
https://www.tycoonitos.com/community/market-comments/market-comments-20220414
https://www.tycoonitos.com/community/market-comments/market-comments-20220419
What's your thoughts?
Time to exit this position with a bit of profit.
I had to wait 4.5 months for this trade to work out.
Closed at $1.18 for an annualised profit of 17%.