Today I entered an earnings trade on Las Vegas Sands (LVS). Below is the timestamped (PDT) tweet of my trade:
The last 4 quarters have seen moves in the -7.7% to +8.9% range while the options market was currently pricing-in about a 5.8% move. The options market has under-priced the move 3 of the last 7 times. So that, along with the increasing amount of surprises this quarter led me to structure a wider trade. I am factoring in a vol crush of -40/-4 (Weekly/May). Below is the risk profile of the trade:
My spread sags a little on the downside because I wanted to lean long into this trade. Depending on the open, I will more than likely take off one of the diagonals. Here’s the profit zone highlighted on the price chart:
