If you wake up just in time for the opening bell, you might miss all the fun. Take WMT, which was up the equivalent of 2.4 standard devs on earnings before the open yesterday, then closed pretty much unchanged. Granted, the lower liquidity of overnight markets can mean bigger price swings. But it traded close to $125 for a couple minutes on the open before sinking back down below $121 by late morning. That meant that close-to-close, WMT is still stuck in the range it’s had for the past couple of months. And if earnings can’t break it out of its range, it might stay there for the next month until holiday retail speculation kicks in. With a 50% IV rank even after earnings, WMT is a good short premium trade candidate. If you think that WMT might trade in a range for the next few weeks, the short iron condor that’s long the 114 put, short the 116 put, short the 125 call and long the 127 call in the Dec weekly expiration with 28 DTE is a neutral strategy that collects a credit 1/3 the width of the strikes, has a 74% prob of making 50% of its max profit before expiry and that generates $1.37 of positive daily theta.
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