hello Traders,
food for thought….
risk a small amount for a potentially large return….
if the gambler side of you needs a fix, upcoming FDA decisions can be a place to look for trades.
A few things you have to watch out for:
low volume, wide bid ask spreads, wild swings in price and IV, rumors, and news,
to mention a few.
Having said all that here is ITMN with FDA news on the horizon. IV is screaming well over 300% in mar. and over 200% in apr.
Here are a couple trade ideas to possibly capitalize on this huge IV.
here is a Iron Condor favoring the bullish case. of course you can devise any scenario you are comfortable with.
If the news comes out and the stock has a huge move your max risk is only $88.00
But if the news does not come out or for some other reason the stock stays in this $11-$24.00 range there is a potential max profit of $412.00
You volatility skew enthusiasts might like this one. Here is a simple calendar spread.
This one risks only $80 with a theoretical potential profit also in the $400.00 range. Of course you can choose different strikes based on your bias or comfort level.
Just for fun and a learning experience why don’t you put one of these trades in your PaperTrade Account and see how it goes.
and don’t forget, if this one turns out to be a loser doesn’t mean the next one will / and vice/versa. If this one is a home run, great, but the next one might be a foul ball.
Be careful to know your risk going into one of these higher risk trades. Make sure it is well defined and you are willing to live with a complete loss.
Diags for example look tempting but the risk is not certain. I prefer to stay with vertical spreads such as condors, or flys, or a straight up calendar without diagonalizing in these highly speculative opportunities.
Do you have any other ideas for trades ? or comments on these ideas are also welcome.
good trading
Marko
