We have shared our member earnings trades in AAPL, SBUX, AMZN, WYNN, and OPEN with you here on this blog once the closing bell rings. All five have been profitable trades, something we are very happy about. We do not go huge on these earnings trades, but our 100% win ratio has made a difference nonetheless.
Today we kept with our outside the expected move strategy with the trade we did in LNKD. We shared our trade with members before the bell, and are sharing the email we sent to members with you now for educational purposes.
LNKD expected earnings move is 7.60, giving it an expected move range of 69.10 - 84.30 based on current price. Feb2 weeklys implied volatility (IV) is 190%, Feb IV 104%, and historical is around 60%. They have only reported earnings twice now, resulting in a big downside move from 100 on the first report and a muted reaction to the most recent report.
This is a tough one since there is little history to look at, and historical volatility is not very accurate due to lack of data. That makes this much more of a high risk earnings trade, so we want to stick with something simple with defined risk.
We just filled the LNKD Feb2 weekly 65/70/85/90 Iron Condor @ 1.85 credit. Risking $315 to make $185 per spread with expiration taking place tomorrow in these weekly options. 63.15 & 86.85 are the break evens, keeping both outside the expected move with a little more cushion to the downside.
We went very small on this given the lack of historical volatility data and the fact this is only the third report for LNKD. That said, we couldn’t resist placing a trade since LNKD is liquid and has extremely high IV levels on the weekly options going into the earnings report.