What I like about this trade is that the markets are very bullish and a Chinese tech giant is about to report their first earnings since the IPO. The unknown factor is very high on a trade like this. BABA at $98.60. Price target after earnings $110.00+. Buy BABA Nov7 107.00 call at $0.95 (exact strike and price to be determined). Maximum risk $100.00. Stay tuned for the update, my plan is to enter on Monday November 03 at 10:00 AM EST. Comments from the ET peanut gallery are welcome.
This time you might be right as there is no history for BABA move post earning announcement, so I will wait and see. If I am you, I will go for cheap straddle.
I think you mean strangle. Cheapest straddle is about $7.20. BABA Nov07 99C/99P straddle $3.50/$3.70 = $7.20 BABA Nov07 107C/92P strangle $0.95/$1.10 = $2.05 I don't like strangles or straddles because they are too expensive. Since I'm bullish on the overall market I prefer to buy calls only.
UPDATE BABA at $99.88 Bought 1 BABA Nov07 107.00 call at $1.20. Price target after earnings $110.00+. Maximum risk $120.00. My plan is to close on Tuesday November 04.
A good purchase, so far. FWIW, the 108C could be sold for around 1.40 as I type. Credit + 100 max. value. Zero risk from entry. I know, I know, you're shooting for another jackpot like the GOOG trade last year.
clickable link: "I like to avoid micro-managing a position, but I would consider selling half if it was up well over 100%"
Bought a weekly 95/107 strangle today at 1.30 and 1.32. Normally don't do these earnings gambles, but like the potential on this one. A few bucks on the line can't hurt.
Yeah, I thought that you wouldn't like that idea. Heck, I don't even like it. Not for a one lot. With bigger size, maybe sell off some call premium to reduce risk and trade at an advantage. Obviously, if BABA wasn't up today, I wouldn't even mention it.