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Trade Idea – LNKD Non-standard Strangle

 

Linkedin (LNKD) has made a great move in the last month from 109 to 126.

 

Right now, its trading at 125.8, but it trades in $5 strikes, so to get a straddle or strangle will skew the Delta to one side.

 

The Weeklys expiring this week have premium, so the trade is Short Straddle, but the contracts are skewed to achieve 2 things –

 

THE TRADE

 

1) A fairly Delta neutral position to start with

2) Give it a bit more room to the upside due to the momentum that’s already built in

 

The Trade is – Short 125 Put / short 125 Call

Contracts 22 on the Put side, 20 on the Call side

Premium received = $8200, Margin = 60K

Return possible = 8% in 4 days (will hold till expiry if position is in safe zone)

Days left – 4 including today

Breakevens – 121 and 130 (approx)

 

Check Figure below

 


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