This Iron Condor Could Make $125 Profit By May 12

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trade desk ,TTD) showing elevated implied volatility with an IV percentile of 54%. That said, options traders may want to take a look at The Trade Desk stock sporting an Iron Condor.


4th digit in ttd mThis means that the current level of implied volatility is higher than 54% of all other readings over the past 12 months.

Why so? In part, the company is scheduled to report earnings after the closing bell on Wednesday. Naturally, we see higher implied volatility around that event.

The Trade Desk stock has stayed within the expected range after three of the last six earnings announcements. in fact, forIn this upcoming earnings report, TTD stock is expected to remain in an upside or downside range of 13.3%.

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trade desk stock today

Therefore, traders who think The Trade Desk stocks won't move much after this Q1 report can take a look at the Iron Condor trade. As a reminder, this complex trade combines a bull put spread and a bear call spread. business with idea? Profit from time decay while expecting that the stock will not move much in either direction.

First we take the Bull Put Spread. Using the May 12 expiry, we could sell 55 puts and buy 50 puts. That spread recently sold for around $0.70. Then design the bear call spread. Hold it by selling 75 calls and buying 80 calls. This spread could generate approximately $0.55 in premium received.

In total, the Iron Condor will generate a premium of approximately $1.25 per contract, or $125 that goes into the trader's pocket for a of 100 shares.

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profit margin

The profit zone for this trade in the trade desk stock lies between 53.75 and 76.25. It can be calculated by taking the short strike and adding or subtracting the premium received.

Since both spreads are $5 wide, the maximum risk in the trade is 5 – 1.25 x 100 = $375.

Therefore, if we divide the premium ($125) by the maximum risk ($375), this Iron Condor trade has a potential return of 33%.

Iron condors work well if the price action stabilizes. However, if TTD takes a bigger step than expected, the business will suffer. Trades held on earnings give little room for adjustment, so they can be a bit hit-or-miss.

According to ibd stock checkupThe Trade Desk stock is ranked No. 1 in its group and has a overall rating In 96, a EPS Rating 94 and a relative power rating 95's.

The Trade Desk The stock is forming a cup-like base within a much larger formation, offering a potential buy point at 66.45.

Arguably, a narrower handle formed in recent days, producing an even lower entry at 65.77.

Please remember that options are risky, and investors can lose 100% of their investment.

Gavin McMaster has a Masters in Applied Finance and Investments. He specializes in income trading using options, is very conservative in his style and believes that patience in waiting for the best setups is the key to successful trading. follow him on twitter @OptiontradinIQ

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