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Forum - Writing Options (Alibaba Group - BABA)    For those interested in writing calls, puts, and spreads

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From: Bender24 (Rep: 178) reply to sammyDate: 08/23/2018 01:01
Forum: Writing Options - Msg #2413 - List BABA msgs Thread #674029557 (Rec: 0)
Re: Short Sept 160/162.50 put spread for $0.47

Earnings are tomorrow morning (or later this morning). The expected one standard deviation move is about $10. I’m playing the Sept puts, whose expected move is +/- $16. My cushion is at about $15 right now. Looking at the one year chart, this stock is at the bottom of a one standard deviation channel, which to me means that it will seek its average in said channel, which is a higher price than its currently at. Plus the Implied Volatility Percentile is above 50%, meaning that option premiums are expensive, and hence better to short.

My trade is that this sees a drop in volatility after earnings and therefore a reduction in option price. My target is a 50% return and I’ll close out. The chart has me believing that this wants to go higher. In the end it’s a statistical numbers game and I like the odds with this set up. I’ve certainly been wrong before. Hopefully not this time.

Sent from my IPhone

Reply to sammy - Msg #2412 - 08/22/2018 13:16

Re: Short Sept 160/162.50 put spread for $0.47

Why BABA for this trade as opposed to GRUB for example? Do you want the volatility? Easier to trade in size? I can actually see BABA moving down into the low 160's. GRUB seems fairly certain of a move to 140.00. Less down side risk. Thanks again for posting your trades.
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