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Options Trading Ideas – 4.12.2020

A couple of options trading ideas for the upcoming week. As always, I wrote these ideas for my own record-keeping to summarize my thinking and as a way to communicate with other options traders to exchange information. It is not financial advice or solicitation. Please do your own due diligence if you do decide to trade them.

1) BBBY (Bed Bath & Beyond)

Reason to Trade BBBY

This is volatility earning play. Earning is coming up for BBBY (April 15, 2020) and the Implied Volatility (IV) percentile is at around 75%. Generally speaking, IV increases before the earning call and decline right after it.

Looking at the daily chart, it’s moving within a channel between $7.5 and $3.5 level.

The weekly chart shows a downtrend and considering the current retail industry situation in general, likely it won’t penetrate the $7.5 level.

BBBY IV percent

BBBY daily chart

Potential Trade Execution for BBBY

May 15 expiration, $4 Put and $10 Call Strangle.  Profit from decrease in the IV if the price does not move too much.

If the price moves down, close the Call leg and keep the Put. Don’t mind owning the stock at around $4 in any case.

If assigned, assuming BBBY won’t go bankrupt anytime soon, will sell covered call until the stock price climbs back up.

BBBY May 2020 strangle

2) OPK (OPKO Health, Inc)

Reason to Trade OPK

Purely technical. IV is around 90%. Apparently May 15, 2020 $2.00 Call has really high IV right now. Something is boiling. Earning is on May 5, 2020.

Right now it’s close to the bottom of support/resistance channel (between $1.3 and $1.8)

OPK IV 4.12.2020

OPK daily chart

Potential Trade Execution for OPK

Sell 1$ naked Put Jun 19, 2020 expiration since IV is pretty high for the Put as well.

OPK options chain 4.12.2020

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