12/4/13
COST reports earnings 12/11/13 before market open.
It has been channeling very nicely for the past year. For the past week it has been retracing from the upper resistance, and is about 1/3 from the top. As the channel is drawn, resistance will be 129.50 and support will be 118 at Jan exp.
IV Rank is very low, which should preclude shorting any premium. Let's look at buying some instead.
Trade 1
This slightly bullish double diagonal should bring in a minimum of $87 as long as COST stays between 120 and 130 by Jan exp. If COST closes right at 120 or 130 we should make over $145. Theta is currently at 2.04. Of course, any vol expansion only helps our position.
Trade 2
This double diagonal is slightly bearish and it's theta is currently at 2.32. It should return at least $108 as long as COST stays between 115 and 120 by Jan exp. and should make over $160 if COST closes right at 115 or 125.
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