There's a time and a place
Notice that flat 10-month moving average right in the middle of its range. This is equivalent to roughly a 200 day moving average.
I wanted to zoom out to really give you some perspective. This stock is messy in the short-term within the context of a longer-term mess.
Mess on mess on mess.
The lack of direction here very much plays in our favor.
So that's the bet we're making.
We sold the $PM October 98 Calls and an equivalent amount of the 90 puts.
*Notice how we're selling the October 13th (Weekly) options in order to avoid any added earnings volatility.
Make sure to read all the risk management details and profit taking strategy here.
There's a time and a place for everything.
Earlier this year we were not putting on trades like this. Volatility was low, and the market was trending higher.
Buying stocks and possibly some cheap call options made a lot more sense.
A trade like this one likely wouldn't work very well in that prior environment.
But this isn't April.
It's a new regime. Remember we talked about this?
And so we've been acting accordingly.
Keep in mind the similar trades we've put on like this over the past month:
Selling a strangle in $MSFT - August 23rd
Selling a strangle in $FCX - August 16th
Check those out if you haven't already, and let me know what you think!
What are you doing in this environment? Are you forcing a strategy that is not conducive for this type of market behavior?
Or are you adapting your strategies for the market we're in?
Know which game you're playing.
JC