Study shows that the market tends to move back to the pre- fed announcement levels within 24-48 hours and we are half way through that period. So if the long-term averages play out again then we can expect a bounce back tomorrow.
What also support the narrative of a bounce back is the fact that the VIX dropped today and we were actually really close to close up today. It was only in the last few minutes when for some reason the selling picked up again.
So what's my trade for today?
#FDX (#Fedex). I played this stock about a week ago and it worked out perfectly. The earnings takes place after the market close today but because they released the figures a week ago I don't expect any major moves. For this reason a wide strangle appears to be a great opportunity for a quick trade. After earnings the volatility normally drops so selling premium before earnings can be lucrative. However, it also carries major risks.
FDX Daily Chart
Trade Type: Short Strangle
Strike: $135 / 180
Expiry: 21 Oct
IV Rank: 56.1
Cap Req: $1546
Annualised Prof at Expiry: 164%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.