TP Says...
Friday, February 14, 2020
Perhaps Oreos aren’t as popular as I thought.  UAL, which popped up in my search for symbols with high IV ranks, announced yesterday that it would be handing out a pack of Oreos as a free snack starting in March.  The stock promptly sold off.  OK, maybe it wasn’t the cookies.  It might just be taking a breather from bouncing off lows it made after selling off after earnings back in January.  Either way, UAL’s IV is actually higher now than it was prior to earnings.  And that could be due to nervousness about UAL cancelling flights in China and continued problems with the 737 MAX.  It’s high IV provides opportunities for short option strategies.  Rather than picking a bullish or bearish bias for UAL, you might consider a neutral bias if you think UAL might stay inside a wide range.  If you are neutral on UAL, the short iron condor that’s long the 73 put, short the 75 put, short the 87 call and long the 89 call in the March weekly expiration with 28 DTE is a neutral strategy that collects a credit 1/3 the width of its strikes, has a 74% prob of making 50% of its max profit before expiry, and that generates $1.20 of positive daily theta.
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