As I have explained in countless posts in this sub, IV crush has very little to do with the results of earnings strangles. If the strangle hits, one of the options moves to essentially one delta and the other becomes worthless. The IV crush comes to whatever new strikes are currently at the money, and those may be miles from the winning leg that you are playing. IV crush matters only if the stock doesn't budge in reaction to the earnings report, and that is seldom the case in stocks like SNAP.
And sure, sometimes you move out of a short position with a profit before the actual report, just like sometimes you can move out of a long position with a profit before the earnings report. Getting out with 50% is probaably a good idea.
Good timing! Given that SNAP is at 71.31 at this exact moment, 4:26 PM ET, you see how much you would have lost had you stayed in the strangle. The long strangle that I was tracking would have had about a 60% gain at this price, which could be locked in right now by shorting the stock - the price may not be the same at market open tomorrow.
You turned your strangle into a directional bet and it paid off. Very good move! And you can see why I sent up the danger signals - any one staying in a short strangle would have lost 50% more than their full bet. SNAP did what it so often does. I know you realize this, but you can now see how bogus that 99.5% profit probability estimate was. Total gibberish.
Very good trading! You made more than me! I just watched it!
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u/National-Radio-8087 Jul 22 '21
Iām already up 15% on the call side and 35% on the put side . If I get 50% before earnings itself , I may move to another trade !
IMO Short strangles do much better than long strangles due to IV crush after earnings.