Short Call Spread (TGT)    Comments?

Closed. Total Loss: -$66.60 Length: 3 Days.

Start: February 23rd

Target (TGT) are releasing earnings tomorrow morning before market open.

The stock has been in a downtrend for the past 9 months and volatility is relatively high for the Feb 26 expiration; trading at 54%.

I expect the trend to continue and with implied volatility being high I will enter a trade that attempts a play on both; a short call spread. I am betting that volatility will decrease as well as the market price to decline.

I sold the $74/$74.50 call spread for $18 credit per contract, and again, a massive 2 lots!

Here is the payoff profile:

Here are the option closing prices for Monday's session that I based the order price from and my order confirmation screen:

Updates to follow...

Update February 26th

TGT released strong earnings and the stock shot up well and never made it back below the upper break even point:

The trade was a loss, losing $66.60. Here are the closing values of the trades:

TGT Short Call Spread        
TGT Feb26 $74.50 Call 2 0.886 3.93 608.8
TGT Feb26 $74.00 Call -2 1.053 4.43 -675.4
Total   -0.334 -1 -66.6

 

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