Strategy For the next earning on May 18..! (Skin in the game)
Updated
Before any action, we should answer this question:
Is BABA going to experience higher-than-expected volatility in the next 3 weeks?
If your answer is No, do not waste your time reading the rest of this article!
If your answer is Yes,
Then we should talk about the direction:(Current price for BABA Put/Call option is 3.1-3.4 USD for May 19, 2023
If you think it moves toward 105: Buy 2x Call and 1X put, strike price 85, expiration May 19.
If you think it moves toward 79: Buy 2x Put and 1X Call, strike price 85, expiration May 19.
Position size: 3% of your capital (2%+1% based on the direction you think it will move)
What could happen:
1- BABA does not move: you will lose 3%
2- BABA moves big against your prediction, you will not lose any money!
3- BABA moves toward your target, you will double up!
Statistics:
BABA's average weekly move is 11.63% (Min:4.8%, and Max: 26% in the past trading year)
BABA's average daily move was 4% (Min:1.5%, and Max: 13% in the past trading year)
Skin in the game: I have bought 20 Call options and 10 put options Strike 85, May 19, 2023
if the price remains between 75-90, I will lose money, otherwise, I will win!
Is BABA going to experience higher-than-expected volatility in the next 3 weeks?
If your answer is No, do not waste your time reading the rest of this article!
If your answer is Yes,
Then we should talk about the direction:(Current price for BABA Put/Call option is 3.1-3.4 USD for May 19, 2023
If you think it moves toward 105: Buy 2x Call and 1X put, strike price 85, expiration May 19.
If you think it moves toward 79: Buy 2x Put and 1X Call, strike price 85, expiration May 19.
Position size: 3% of your capital (2%+1% based on the direction you think it will move)
What could happen:
1- BABA does not move: you will lose 3%
2- BABA moves big against your prediction, you will not lose any money!
3- BABA moves toward your target, you will double up!
Statistics:
BABA's average weekly move is 11.63% (Min:4.8%, and Max: 26% in the past trading year)
BABA's average daily move was 4% (Min:1.5%, and Max: 13% in the past trading year)
Skin in the game: I have bought 20 Call options and 10 put options Strike 85, May 19, 2023
if the price remains between 75-90, I will lose money, otherwise, I will win!
Note
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