Last Friday on Options Action, we did something we rarely do; we bought options instead of selling them. Our goal was simple, to try and give you new names and new strategies so you could get an edge on earnings. And while it remains to be seen whether we accomplished said goals, I thought a recap was in order nonetheless.
Dan Nathan came out of the bat first with Akamai . Over the last 8 quarters, the stock has moved an average of 15% on earnings. However, this quarter, options prices are suggesting a much more muted move, to the tune of 8.5%. Unsure of the direction but somewhat more convicted on the magnitude of the move, Dan recommended buying the November 44/50 strangle, purchasing both the 44-strike put and 50-strike call in the November Expiry for a total of $3.05. The trade pays off if (AKAM) closes either above $53.05 or below $40.95 by November expiration. Anything in between, and Dan will experience losses.