Chart should be self-explanatory using mark-ups.
My trade is a bit aggressive, but I think w/ how over-stretched growth / tech stocks have been heading into the new year a larger pullback is coming. Already have seen the Q’s (QQQ aka Nasdaq) getting pounded over the last few sessions. I think that will continue.
FB implied volatility is trading around the 43rd percentile, which is a bit neutral, but, still a good environment to put on long vega positions.
Here’s my trade:
210/225/250 APR16 '21 Call Butterfly
Was filled for a net debit of $1.52 4x8x4 contracts
The position centers around that 225-ish 50% FIB level and prior inflection zone.
This is where max profit occurs.
B.E.'s are 211.56 and 238.53.
Risk to Reward is 1:8.75
The other aspect of the “aggressiveness” of the trade is theta (time decay). I’ll need to see this play out rather quickly as the position expires in 42 days. This is considered aggressive because of how long it took for the breakout pattern to form in relation to my profit window. However, if we do see a larger growth/tech takedown, things can move quickly. Especially if rates continue to spike (even moreso violently).
These posts do take some time, and I’m floating a trial balloon or two here to see if anyone is even interested. If not, I see no value continuing to post. If these help, please let me know.
-Jake