Stock / Symbol: [private_monthly]Netflix / NFLX [/private_monthly]
Price at trade post: $183.50
Option Strategy: iron condor
Max Risk: $920
Max Reward: $80 or 8.69% by Jan 28th, 2011 expiration
Profit Range: $150 - $220
Reasoning: We're taking advantage of volatility heading into the [private_monthly]NFLX [/private_monthly] earnings announcement today, after market close. We do expect that earnings can take this stock up or down quite a bit but this trade has a 17% or so cushion in either direction. We also really like that our OptionsXpress risk graph tells us that our trade configuration has a 99% probability of success. This trades utilizes the Jan Week4 options which will ideally expire worthless come market close this Friday.
IMPORTANT NOTE: We're going to wait until the last hour of trading to put this trade on so as to take full advantage of the volatility heading into the earnings countdown. If we get enough of a volatility increase, we'll look to see if we can increase the profit range and sill net the 9% gain. We'll put out an update when we get filled.
Trade Details:
[private_monthly]
Buy 2 NFLX JanWk4 145 Puts
Sell -2 NFLX JanWk4 150 Puts
Sell -2 NFLX JanWk4 220 Calls
Buy 2 NFLX JanWk4 225 Calls
for a net credit of $0.40 per contract or $80
Requirements:
Cost/Proceeds ($80.00)
Option Requirement $1,000.00
Total Requirements $920.00
Estimated Commission $12.95
[/private_monthly]
Chart:
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