Yesterday we previewed the earnings of several stocks of interest and detailed some trade logic in two in particular, UBER and ROKU. Let's check back in on those two following their earnings moves.
First, UBER. The set-up into the event with UBER had some similarities to LYFT the day before, yet UBER was already higher on LYFT's earnings. The options market was pricing a 2 week expected move of around 12.5%.
We detailed a bullish price target, in line with the expected move higher:
a bullish price target of ~$34 (about 10% higher in the stock) for May 15th looks like this on OptionsAI technology:
The stock is up ~4.5% today, trading $32.25. With stock here let's see how those 3 trades compared, (all have May 15th expiries, all based on 1 lots):
- The 30.5 call is $215 a gain of just 6%.
- The 30.5/34 debit call spread is $185, a gain of 36%
- The 30.5/27.5 credit put spread is $34, a gain of 67%, but versus risk of $196 a gain of 35%.
The big winner is the credit put spread, it had higher odds to begin with, but obviously "cost" more than the debit call spread. Both spreads were less expensive than the call.
Now to ROKU. In ROKU we detailed a neutral strategy, showing an Iron Condor and an Iron Butterfly centered around $135, from yesterday:
Here's a neutral target of ~ $135 for May 15th, from OptionsAI technology:
With the stock ~$128, the butterfly is worth about $975, for gains of $125, despite the move lower. The Condor on the other hand is trading $107, a gain of $123. Here's a look on the chart of just how much room a condor provides for a "normal" move (based on a 5 lot):
The interesting thing to note on the chart is with the updated expected move having contracted after earnings, the bearish consensus is barely threatening the downside wing. And any close on May 15th within the green bands would mean the max gain (as indicated by "if stock expired here"). However, it is worth about $1 here, and can only be between $0 and $5, so at some point the risk of waiting on the last $1 in gains must be balanced with the other $4 the other way if the stock were to continue lower. But the visualization of expected moves from the options market and updated metrics on the trade itself helps with decision making on the timing of an exit.
Expected moves can help build a trade, and then they help just as much in managing one.
See a part of OptionsAI technology with your own price target and demo trades in AAPL HERE