A Bearish Call Credit Spread During Earning - NVDA
Today, I am experimenting on trading options during earnings reports with the goal of developing a competence in all areas of options trading. Today, I am implementing a bearish call credit spread on NVIDIA and trying to take advantage of a likely volatility crush, which reports earnings tomorrow (August 28, 2024). I will set the strikes of the spread to 149 and 150 with deltas of 14% and 13%. This limits my risk to $100 (plus the $1.20 transaction fee) minus the premium of $11. The implied volatility is elevated to about 130%, where it is typically about 70%. (Note: I typically try to keep delta at about 10%, but I chose a 149 strike with a delta of 14% because it has an adjacent strike of 150, which limits my risk. Strikes greater than 150 had intervals of 5, increasing my risk.) Ideally, NVIDIA does not jump 15+% above the breakeven of $149.11 (see screenshot below) and cost me $89. Does this trade setup make sense? What would have been a better trade? Have a lar...