Let’s take another look at this. On a daily chart, the volatility is right in the middle of the range. On a 5-year chart, it’s a little bit on the higher end of the range. On a daily chart, it’s right in the middle. It certainly has been higher. Volatility may increase before we get to earnings.
We’re going to go with Adobe. We’re just checking the chart out here. It looks like it’s kind of in a trading range. Volatility has been increasing over the last 9 months. If we take a look at the 60-day chart, we’re definitely on the low end of the 60-day chart here. We’ve had a few up-days, and it looks like prices have moderated and stabilized somewhat.
This might be a good entry point. We’re going to go ahead, and we’re going to buy 10 of these straddles, of Adobe, August 40s. That seems to be the closest to the in the money, at $41.21. We have to purchase 300 shares of stock in order to get Delta-neutral, here. That’s fine by me. We’re just going to go ahead and enter the order for 300 shares, to sell 300 shares of stock, after we get filled on our straddle here.
We’re going to try and enter it in at the mid-price, just to see if we can get it. We’ll go ahead and enter that. Let’s just take one quick look at this. Adobe was $2.63. Now it’s $2.65. The volatility has increased, just a little bit. The implied volatility is very nice, at 39%. Let’s just double-check and make sure it’s still 39%, here.
It’s still 39%. We have a fairly decent range. I think it should be a pretty good candidate.
If it doesn’t move, that’s the only danger. If it doesn’t move, then we would really need to think about it.
Let’s see if we can get the order in, at least at $2.68. In the meantime, I’m going to bring up CMED here. I’ll see if we can’t find a way to do these a little cheaper. If I did go out of the money on these, if I went to the $45, you could do a strangle rather than a straddle. That would be a little bit cheaper, on CMED.
Let’s see what that would do. I can always analyze that. I’m at the 50s, and I want the 45 puts. It is a little bit cheaper. That puts us into a relatively neutral Delta position right here. I’m not crazy about starting out with a $200 loss on this, though.
We could buy some shares. We could buy 60 shares of CMED. Let’s go down to 60. We’re back in the middle. Certainly, we would be starting out here with a loss of $200, which I’m not crazy about. That’s why I prefer straddles, to begin with.
Let’s see how we’re doing on this one. It looks like it’s still working. Let’s bring up the order. Now it’s at $2.70. It’s already gone up. We may not get filled here, on this. It doesn’t look like it’s going to go back down. For some reason, as soon as we put our order in, the mid-price jumped up to $2.70. We’re 2 cents off, and they’re not going to give it to us.