This is another post earnings butterfly or "White Hoof Special" as my trading group likes to call it, courtesy of G-Money.
Earnings came out on 5/12/08 and the stock has started it's bullish move with a gap up from yesterday's close this morning and volatility is higher than it has been for PBR over the past year at least. In this type of trade, you expect volatility to start to drop (when stocks move up or after the news comes out like with earnings, because typically volatility drops because there is less fear among investors). So I am buying this butterfly today as follows...
Bought Jun 70 put
Sold Jun 65 put
Bought Jun 60 put
Net debit of $0.94
Exit upon volatility crush within 7-10 days post earnings.
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