Hi guys, I want to trade the 25/27/29 long neutral butterfly for T (expiration Feb 18). There's no ex-dividend risk (it was on Jan 7) but the earnings date for T is Jan 26. 1) Does the risk of assignment increase because of an upcoming earnings date? or do I only need to worry about the ex-dividend date? 2) Does an upcoming earnings report create volatility before the earnings gets released? Thanks
IMO ..... the $2 spread in between the strikes is too narrow for an earnings trade. Maximum loss is below 25 and above 29. There is a very high probability T will trade below 25 or above 29 after earnings. 2) Yes
This is AT&T that we're talking about. It doesn't really move. Reasonable shot at making money for not much premium. I think the trade makes sense, but I would go one strike or two higher.
Thanks for the reply OptionsOptionsOptions. What would be a better spread given the earnings risk? Would the 24/27/30 spread be better? The problem with that is that the 24 strike has a volume of 2 with a 15 cent difference between the bid and ask. Back to one of my question from the opening post: does the risk of assignment increase because of an upcoming earnings date? Thanks