DIS – an update after earnings announcement

So, last night at the close DIS reported earnings.  Initially AH the stock was up but as of right now, DIS is trading down 2.75% at $34.32

As you can see from my previous post (Click here) I was looking for a big move up or down to profit from this trade. 

We didn’t get the move I was looking for, however, I’m about breaking even and actually up a few bucks (enough to cover commissions at least).  Why did this trade work even if the underlying did not make the desired move?  (Rhetorical question).  My prediction of IV was correct.  August lost mostly all of its extrinsic value and Sep did not. 

You can see in the LiveVol Pro skew tab below how the Aug IV (red line) dropped back down to the same level as the back months. (click any picture to enlarge)


Below is the Thinkorswim analyze tab at the current price:


You can see the current P&L (white line) is almost all above the breakeven line due to the IV drop. 

At this point I’m thinking of exiting all or half at breakeven.  With less than an hour to trade today, I’m going to watch for a late day sell off.  I’ll likely exit if we get it or not.

I’ll keep you posted.  Thanks for reading! Lawrence

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