Trade idea
SPACEX diagonal spread
The speaker discusses selling puts in SpaceX when implied volatility is high, as it allows for a defined risk trade with the potential for profit from volatility. The example given involves a 65 strike price with a cost of $10, and the stock price fluctuated between 165 and 210, resulting in a profit of $4. The strategy is based on the idea that high volatility can create opportunities for defined risk trades, even if the stock moves against the position.
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Strategydiagonal spread
Assetequity
Expiration190 days
Time horizon190 days
Entry / triggerhigh implied volatility
Target / exitprofit from volatility
Invalidation / stoploss if stock moves significantly against the position
SpeakerSpeaker
Structure / legs
- 65 strike, 190 days to expiration
- 65 strike, 190 days to expiration
Risks
- Significant losses if the stock moves significantly against the position
- The cost of the trade may not be justified if the stock does not move as expected
high confidenceVerify in video at 1:12:32 ↗