Over the last couple of days, I’ve written to you about Selling Put Spreads, Selling Call Spreads and Long Iron Condors. Now I am going to track how these three strategies will work for JPMorgan (JPM), which will announce its earnings tomorrow.
JPM is currently trading at 55 with earnings due Friday morning before the market opens. Volatility is elevated, though not “crazy” high, so we are not likely to see the results that we might see in a stock like Apple.
Here are the current volatility readings:
July 12 expiration: 51 volatility
July 20 expiration: 26 volatility
September 21 expiration: 21 volatility
For this exercise, we will THEORETICALLY sell a call spread, sell a put spread and combine them in an iron condor for three different expiration cycles.
July 12 expiration:
Sell the July 54/53 Put Spread for $0.18
Sell the July 56/57 Call Spread for $0.20
Combine the two strategies to make an Iron Condor for a total of $0.38.
July 20 expiration:
Sell the July 53.5/52.5 Put Spread for $0.17
Sell the July 56.5/57.5 Call Spread for $0.18
Combine the two strategies to make an Iron Condor for a total of $0.35.
September 21 expiration:
Sell the September 52.5/50 Put Spread for $0.50
Sell the September 57.5/60 Call Spread for $0.59
Combine the two strategies to make an Iron Condor for a total of $1.09
Just to reiterate … this is theoretical exercise. I actually don’t like many of these trades in JPM because volatility is not at extremely high levels. But I want to introduce these strategies so that we can use them when the proper high volatility opportunity presents itself.
I will take note of these spreads’ results tomorrow, and will follow up with you on Monday.