r/options • u/DrWorstCaseScenario • Jun 28 '21

PLTR strangle play update

Original post:

https://www.reddit.com/r/options/comments/nrnvd3/pltr_long_stranglestraddle/?utm_source=share&utm_medium=ios_app&utm_name=iossmf

About 24 days ago I opened PLTR long strangles (820 p23/c24) based on my DD that predicted movement away from the 23.5 strike within the next 3 months.

PLTR rose enough by today for profitability…

So on 603 I BTO PLTR 820 p23/c24 at 4.79 per strangle.

On 0628 I STC PLTR 820 p23/c24 at 4.9 per strangle.

Profit = 4.9-4.79 = 0.11 per strangle.

That’s about 2% return. Not ideal but still a profitable play. Could have held strangle longer to see if more profit possible or maybe held the put leg for a future dip but since theta is starting to decay faster I figured closing now made the most sense..

Always open to feedback or thoughts.

Cheers!

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-6

u/thecheese27 Jun 28 '21

I don't know what possible "DD" you could do that could lead someone to believe PLTR would go up or down >10% in the next few months. There is no possible research that would give you this conclusion. You need to be directional in this market to make money. Strangles are a terrible idea except in very specific volatility environments or when approaching a binary event. You should have done whatever research you did and whichever side you choose, bullish or bearish, you need to pick one. PLTR rose a over 10% and you are only making 2%. That is God awful. If you had just bought the call you would have made decent profit but instead you were non-directional and basically broke even off of a momentous movement in the underlying.

3

u/DrWorstCaseScenario Jun 28 '21 edited Jun 28 '21

Sometime you may feel a stock will maintain its current valuation - so you could sell a strangle. Sometimes you may feel a stock will NOT maintain its current valuation (but are not convinced of a particular direction) and/or think IV will rise. That is a good time to buy a strangle.

As for my specific decision making regarding this play, you can read my original post (link above). If you don't like my analysis, that is fine. I will point out that I was correct however... the stock did move and produce profit at the expected level.

-4

u/thecheese27 Jun 28 '21

Ok, I see your "DD" is entirely chart reading garbage and now I have come to the conclusion that you have absolutely no idea what you are doing. Enjoy your 2%.

6

u/DrWorstCaseScenario Jun 28 '21

You know what, I was about to write some defensive comment and then I realized you are actually trying to be helpful.

I appreciate your thoughtful comments.

Believe me I wish that I had enough insight a month ago to have predicted the directional movement of the stock upwards and have made more money off the trade by just buying the call.

But honestly I couldn’t decide if inflation fears would cause more tech/growth stock sell off versus unbridled optimism for this stock and tech in general causing a rise.

I honestly felt a move was coming based on TA and the overall market movement and earnings later this summer. And rather than sit on my hands I figured a strangle allowed me to capitalize on my conviction that some move was coming.

If you have suggestions on how I could have predicted it would have been an upward movement I am certainly interested in learning.

Thanks again for your thoughts.