Huge swing at the market and closing up nearly 2.7% on a day when the inflation is reported worse than expected. I wonder what the speculations are about this move. The basics of economics suggests that the stock market should have gone lower today, which it did in the earlier part of the day (down 2.4%), but I am confused about the 5.1% turnaround.
Some experts actually called today the bottom, while many experts were saying that the market can easily drop another 20%. It's certainly confusing times...
But the great news is that with stock options we can play both sides and concentrate on the statistical indicators.
So what's my trade for today?
I could not resist but to try my luck with an earnings play on #C (#Citibank). The only logic with earnings plays is that the expiration needs to be close as the IVR (volatility) tends to collapse right after the earnings. Collapsing IVR means that the option prices drop and the closer the expiration is the biggest the movement is.
C Daily Chart
Trade Type: Short Strangle
Strike: $37 / 47
Expiry: 21 Oct
IV Rank: 88.7
Cap Req: $466
Annualised Prof at Expiry: 499%
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.