▶ Full Post Text
https://preview.redd.it/hz45hl5rtn6h1.png?width=1388&format=png&auto=webp&s=c19b5c3f4ce984268abbdc990f1d4a267d1d8c5b
Yesterday, I posted about an EA Vol Crust Trade on $ORCL.
[https://www.reddit.com/r/options/comments/1u27ptc/oracle\_orcl\_earnings\_tonight\_after\_the\_bell\_whos/](https://www.reddit.com/r/options/comments/1u27ptc/oracle_orcl_earnings_tonight_after_the_bell_whos/)
My thesis was that the market was underpricing the expected move, and even with the expected Vol Crush, IV was cheap, so I put on a non-directional long IC.
After the bell $ORCL announced and had a massive beat. Market goes bid, right? Not so fast. They also announced a $20 billion stock issuance to pay for AI build out, and so the stock immediately traded lower.
The initial move was down, -8 to -8.5% not enough for my puts to be ITM. However, as always, it ain't over until after the next morning's price discovery. I wait until at least 9:45 before I exit the trade, as at that point the market has settled in, bid-ask spreads have tightened, and full vol crush has not yet set in.
Right on cue, by 9.45 $ORCL fell to a low of $175, well below the strikes of my debit put spread, so time to take profit.
I open the trade at a $2.45, exited at a $2.68 credit, booking a solid gain. The capital at risk on the trade was $2.55, so the $0.23 cent profit generated a 9% return in about 18 hours. I allocated 1% of capital to the trade, so 9bp return to my book.
Not a home run by any means, but slow and steady wins the race. This trade further validates my thesis and process, so on to the next one!
$ADBE on tap for EA post-close today. We'll see what the numbers tell me and will trade accordingly.