$12 lottery ticket next week, 85% winning chance.

Intro

Before we start the strategy, here is my recent DD(Short Iron Condor) P/L from the last week.

$BABA: +$840 (expected maximum credit met)

$PFE: +$70 (expected maximum credit met)

$PYPL: -$174 (missed it but, a small portion of investment lost because of the benefit of Short Iron Condor strategy)

Total: +$740 profit

Strategy for the next week.

Because of the election last week, the market is still unpredictable, it's either another rally or it's time to crash. So I will be using the failsafe strategies for a while, and instead of the Short Iron Condor strategy, I will be using Strangle this time and I'm looking at $TIF Tiffany, Co.

Long Strangle's Benefit

  • This strategy has a risk that is limited to the extent of net premium paid
  • This strategy has the potential for unlimited reward
  • This strategy can profit from either side move in the price of the underlying instrument, provided the move is substantial

About Tiffany, Co. (Diamond Jewelry)

$TIF is one of the lowest volatility stock, so mostly the time decay will burn all of the cash you put in, so the cost for the options for $TIF is usually cheap. And I think next week will be the only the highest volatility chance for $TIF.

So why $TIF?

  1. The FRB is ready for the 2nd stimulus check (another market rally possibility)
    https://www.thegardenisland.com/2020/11/07/news/fed-signals-readiness-to-do-more-for-economy-as-virus-rages-2/
  2. The election is over so a high volatility week is expected (also potential crash)
  3. Tiffany Says ‘Oui’ to Discounted $15.8 Billion Bid From LVMH. The Shares Are Up.https://www.marketwatch.com/articles/tiffany-says-oui-to-discounted-15-8-billion-bid-from-lvmh-the-shares-are-up-51603996836?mod=mw_quote_news

DD

$TIFLong Strangle: BUY 130C + BUY 132P EXP 11/20 (ONLY $12)

Profit Chart for the $12 investment, it will be more than 1 contract for me indeed.

Breakevens at expiry: above $132.12 or below $129.88 (Strangle Benefit, you get an infinite amount of profit either it is bullish or bearish)

DISCLAIMER: if the $TIF price does not move, as usual, you lose all $12. This is why I call this a lottery ticket.

Submitted November 08, 2020 at 06:37AM by ClientSpare8405
via https://ift.tt/2U5httn

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