My post was post-earnings. I rarely buy premium, particularly with earnings IV built into it. My break-even range is $212-243. I'm quite comfortable with this range.
I understand. My point was that for stock like TSLA that can move a LOT post earnings, selling premium is extremely risky, even when IV is elevated. Your short strikes were only 3.5% from the price. TSLA moved 5% in the last 2 cycles, 11% in the previous one etc. (much more intraday). The odds are simply not in your favor on this one.
Thanks for this. My B/E range is ±6.7%. The absolute average of your close% change is 6.4%. The max% is obviously higher than this (conversely the low% is lower). Another one of my considerations was the fact that there has been a fair amount of transparency on orders/sales this quarter so I expected there not to be too many unknowns in the quarter.
If you believe that the stock will not move much, wouldn't calendar be a better trade? Your strangle requires around 4k in margin, so your maximum return on margin is around 20% (if you let both options expire worthless). With calendar, your return would be much higher if the stock doesn't move much.
I don't concern myself with margin, particularly with a one-day trade. Sure a calendar would work too, especially if it pins the strike. But the strangle gives me a little more room and flexibility to make a profit. I understand the risk is unlimited, but I just wanted more room to be right.
Duhhhh. They always have a second C.C. You didn't know that? OMG. Watch out below. But get long Apple. Its a Peach.
Calendar doesn't have to pin. You still get a very nice gain even if the stock moves half the implied move. And return on margin is the only thing that matters, even for one day trades. It still ties your capital.
I understand the calendar doesn't have to pin, but I think the B/E is tighter than $212-243. I don't come close to using up all of my margin which is why I don't care about it. I defer to other portfolio risk parameters to guide my sizing.