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If the UL moves up/down soon, the trade wins right away. Since you long, time is your enemy (decay) and the longer it takes for that move to occur, the wider your BE points become because each side's spread has only about +10 delta. They may be wider than you think. If you can model the...

You should look into triple reverse inverse short leveraged ETF's :)

LOLOL... Averaging 100-120% a year? Uh huh. This trade has about a 25% chance of incurring a total loss.

ONKKKK!!! Wrong answer. Do not pass GO. Do not collect $200. Go back to Yahoo.

Not the same risks. IV collapse affects you but you won't lose anywhere near as much vega wiith a spread because to some extent, what you overpay for the long legs, you receive for the sale of the short legs.

How about you try learning to say Long Butterfly and Short Butterfly? :)

---------------------------------------------------------------------- Quote from spindr0: I repeat what I said earlier. If it's a short term earnings play for an expected large move , the IV contraction, slippage and commissions, and short option drag is going to makes this a small winner, if...

IOW, that's a butterfly.

Buy sheep, sell deer?

If a spread's intrinsic value at expiry is greater than it's cost, you have a profit. But what does that have to do with your initial question which was "Has anyone ever bought Reverse Iron Condors before earnings?" and your follow up statement of "If I expect a large move around earnings ..."...

That about sums it all up. What you bring to the table determines what you take away.

If you model some of these EA plays, you may find that you need to write a new ending to your story. Moving one strike is nowhere the money maker that you think it is.

Not a problem if the stock moves less than the premium received (on an expiration basis). But what happens if the stock moves 2x? Or 3x? Prior to expiry, losses accrue on any early move. It's possible to never see break even.

Because there are multiple variables involved (skew, strike width, amt of IV expansion, time until exp, time held, etc.), there isn't a one size fits all answer. But as a generalization, I doubt that you're going to net a 10% gain on a move to short strike one out. And since IC's a relatively...

If he's buying volatility pre EA, he better be darn good at picking big movers.

Not a good idea. The IV contraction is going to whack the body more and move to strike will whack the other side. For the short wings, the IV contraction gain is smaller and the smaller premium doesn't offset the losses from the long strad until well outside a short strike. And then...

And the Super Bowl Indicator was nearly infallible for the first 30 years. So what...

Any chance a phone number comes with this??? :D :eek: :p

What's best is what gets you the best price and that is determined by who shows up on the other side of the trade and what they're willing to pay/receive. It's also somewhat dependent on how wide the B/A spread is (doing it your way amkes sense with narrower spreads but not with really wide...

Unless the UL is an ultra low IV stock, a 2% move is pretty much a loser for an OTM strangle unless the strikes are $1 away from the UL and the move occurs yesterday. It's a low probabiity trade. Any chance you can find some 5% movers in your bag of tricks?