Jeff 9:16 am on Wednesday, November 4, 2015

FB earnings iron butterfly

Sold to Open the $FB Nov 6th 98/103/108 iron butterfly for 4.00.

Trying for a 1-lot for now, may add more or different strikes later in day. If you have questions on how to trade this, let me know.

rknight52 9:33 am on Wednesday, November 4, 2015

Jeff, how did you reach those numbers pre-earnings? Is that a certain range based on prior moves at earnings? What gives you confidence that it won’t blow out either side of that range? Thanks.
Jeff 9:37 am on Wednesday, November 4, 2015

This trade is based on the idea it won’t move much, or if it does tomorrow, it will return to the mean by Friday. The last three earnings reports resulted in only small moves, so I am betting this will happen again. This is a risk-defined, low risk (1.00) high reward (4.00) trade with lower probability. Here are Facebook’s moves over the last 12 earnings reports:

July 29, 2015 AC -1.83%
April 22, 2015 AC -2.62%
Jan. 28, 2015 AC 2.30%
Oct. 28, 2014 AC -6.07%
July 23, 2014 AC 5.17%
April 23, 2014 AC -0.79%
Jan. 29, 2014 AC 14.10%
Oct. 30, 2013 AC 2.42%
July 24, 2013 AC 29.61%
May 1, 2013 AC 5.61%
Jan. 30, 2013 AC -0.83%
Oct. 23, 2012 AC 19.12%
- rknight52 9:42 am on Wednesday, November 4, 2015
  
  Thanks, Jeff. Where do you get those percentage moves? Do you go back and compute them or is there a site that posts that information? That’s what I thought you were probably looking at, but wasn’t sure.
Jeff 9:49 am on Wednesday, November 4, 2015

I get them from optionslam.com
Mort 9:55 am on Wednesday, November 4, 2015

Followed did a 104 5 wide IBF 4.02
Jeff 11:11 am on Wednesday, November 4, 2015

Reblogged this on Options Bistro and commented:

Also, Sold to Open $FB Nov 6th 99/104/109 iron butterfly for 4.00. Moved everything a strike higher, now have a wider profit range. Expiration breakevens: 99.54 – 107.46. Max profit $700, max loss $209.

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