Featured Blogs

Make a Wish

$WISH has been the new talk of the WallStreetBets community ,a sub-reddit found on reddit.com, known for pumping high short interest stocks. All the hyp inside of this stock has driven speculation and IV to a high.

Chart Outlook

By Glancing at the Daily Chart, we can see a resistance up at the 15.20 range. Support-wise we are looking first at the 23.6 Fib level, currently trading around 13.30, and then to the 9 Day EMA, trading at 12.90 at the moment. RSI and Stochastics are both relatively overbought, but we all know that strength index sometimes are meaningless, when it comes to the “apes” of WSB.

WISH Daily (TC2000)

What are the Options?

In our Options Chain, the hype and speculation has driven the implied volatility to a new high, with the IV Rank sitting at 69. All Raw IV in each expiration cycle from now until August Monthly are above 150%.

This hype and speculation, especially to the upside has drastically skewed our Options in our Chain. As the Calls in what seems every Expiration Cycle are trading Richer than the Puts.

Trade Idea

To take advantage of this large IV and large Call Skew. We are looking to sell premium in here, in hopes of an IV contraction and reversion back to its mean. In doing so, we are giving ourselves a higher probability of profit, as well as putting time decay (or Theta) on our side.

We will we looking at the August Monthly Cycle, which contains around a $7.27 expected move, and we will be placing a Short Strangle.

To do this we will need to sell the 12 Puts, and the 27 Calls. This will give us a credit received of around $4.40. Our Delta would be skewed some with negative 8, and our Theta will obviously be positive at around 6.6. This trade will only cost around 122 in Buying Power to place, with our max loss on the downside being getting assigned the 100 shares at $12. The probability of profit on this trade is right at 70%, and can easily be managed if need be.

All in all this is a simple and easy trade to place, that puts time in our favor and lets us take advantage of that over-speculation by the WSB boys.

What are you thoughts?

For more ideas like this sent to your phone daily subscribe today!

Similar Posts

Leave a Reply