r/options
After-Action Report: Adobe $ADBE Earning Play - Market Under-priced the Move - Long Vol Rides Again!
Author profited 77% on an ADBE long vol trade by pricing in higher implied volatility and capitalizing on the post-earnings drop amid AI.
- ADBE beat earnings expectations.
- Faces intense competition from AI.
- Experiencing leadership uncertainty.
- Stock dropped post-earnings despite the beat.
Yesterday I shared an options trade I executed before last night's Adobe earnings.
The market was pricing in a \~7% move. My analytics told me that was too cheap, so I entered a defined-risk long vol position around 3:45 PM yesterday.
Despite $ADBE's beat, it immediately traded off due to a variety of factors, including competition from AI and leadership uncertainty, among others. My long puts were almost immediately in the money, but I don't trade in the overnight session due to lack of liquidity, so I needed to wait until price discovery after they open this morning.
Right before the open, the $ADBE was roughly $198 before catching a bit of a bid at 9:30, then hit a low of $197. By then, vol crush had started doing its thing, so I exited my trade for a credit of $2.27. My initial debit was a $1.28. Profit = $0.98 or 77% ROIC.
If the market stays at these levels, I'll have left some money on the table, but my game is to play the event, not post-announcement moves.
Another one in the W column!
Looking at the calendar, there's not a whole lot to play over the next few days, but I'll be anxiously awaiting when earnings season kicks off in a couple weeks.
Happy trading!
Removed for RULE: No journaling of trades or blogging: why & how are more important than what & when
Everyone wants to show their day-by-day or hour-by-hour trading journey, but this is not the appropriate place for such sharing. What was traded is less interesting than how and why those kinds of trades were made. Posts that are mostly just a list of gains, losses, or a list of trades, or trade images without substantial discussion of why and how, or a repeating series of posts as if you were blogging, are taken down.