July 27, 2022

Intraday Update: META, MRK, BTU

Sizable intraday gains have continued to grow larger after the FOMC raised rates 75bps this afternoon. Gains have accelerated too during Powell's press conference, so as the market begins to run higher, we need to manage some positions:
  • We wait until later in the session to initiate strangles/straddles because we want to make sure risk is well balanced between the bull and bear sides of the trade. META has rallied sharply since an open in the low-160s, so the Aug12 strangle needs to be adjusted on both sides to get the risk more balanced again. The new trade will be:
    • Long Aug12 $185 - $190 call spread
    • Long Aug12 $155 - $150 put spread
  • MRK is scheduled to report results before the open tomorrow, and the stock is red (similar to other Pharma names) in afternoon action. We took off risk and locked in money on the bear portion of the strangle and left the Aug05 $97 - $100 call spread open as a speculative rebound play. The position will remain open into the print tomorrow, though if you are more risk averse, now would be a good time to exit the rest of the trade.
  • BTU is scheduled to report before the open tomorrow as well, and the stock is trading above 22 in afternoon action. The company gave preliminary numbers recently, so it may not be a huge mover tomorrow. However, the bear thesis is looking less convincing as it stabilizes in the low-20s, so the smart play here is to close out the Aug19 $18 - $16 put spread roll down ahead of the print.

Open Positions

* The following Open Positions pertain to the Options In Play trade ideas from this and previous editions. Disclosure of the Trader Co-Author’s actual portfolio holdings, as of the date of each publication, is made below under "Trader Author Portfolio Holdings.".

Trader Author Portfolio Holdings

**As of the date and time of publication