Earnings Beat – FFIV Trade

Market Context
Good day Insiders,

Earnings season continues forward with F5 Networks set to report earnings post the close today. At the time of this update, FFIV volatility is sitting at a prime 83% giving us an expected move of roughly +/-$9. At the time of this update, the stock is hovering around 159. Let’s take advantage of this volatility and see where we go post earnings being reported. We will use 3 pieces on this trade, the selling of a put spread, the buying of an unbalanced condor and the buying of a call spread. Be sure to get all 3 pieces of the trade on, as the risk can be quite uncomfortable in the event there is a dramatic move down and we don’t have the unbalanced condor on to provide protection to the downside.

The Trade
We are going to be selling a put spread, buying an unbalanced condor and buying a call spread.

Risk & Reward
Our trade will use $7,150 in margin. As this is speculation and we never bet the farm, allocating 3-5% of a portfolio is reasonable. We are covered on the downside all the way to $142/share.