Earnings Beat – EA Trade

Market Context
Good day Insiders,

Electronic Arts are set to report earnings after the closing bell and volatility is looking beautiful at 87%. The stock has an expected move of +/-$6.50 and at the time of this update, EA is trading at around $92. This takes potential price target to 86 on the downside and 98 on the upside. I must make a confession here that in the trade we placed yesterday in Google, in handling a few things I forgot to mention the margin that was used and at risk, so humblest apologies there and moving forward, I will do my very best to ensure that does not happen. We will, of course, utilize volatility in placing our three-piece earnings trade, the buying of the unbalanced condor, the selling of the put spread and the buying of the call spread.

The Trade
Buying the unbalanced condor, selling the put spread and buying the call spread. Let us execute all three.

Risk & Reward
Our trade will use $6,700 in margin and give is protection all the way down to just below $80/share. On the upside, our breakeven sits at 96.50. In the event there is no movement, we are risking $202, but remember tomorrow is only Wednesday, there are still 3 full trading days after today’s close, so no movement though possible is unlikely.