Post-gap strangle on LLY

Investing Strategies Options - You Make the Call
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LLY gapped way up 50 points (~10%) on positive earnings report. I know a little about Lilly, but really I don’t know very much about what they do, or what specifically caused the gap. But this is huge movement and because this is post earnings, the volatility premium on the options should be down, so I looked into a strangle thinking that it is likely to either retrace a bit or maybe continue to race up as people hear about it. I really don’t care what happens or why, I just want it to move either way.

I’m in with Call 600 and Put 210. Total cost at the time I got in was 0.92. I need a 4-5% move to profit.

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Oh, I forgot to say that I used a Sept 15 expiration date. I normally would go with an earlier date intending to get out quick, but LLY tends to be pretty stable so I wanted to give it a little time to move. But if I happen to get a huge move right away then I’ll be out rather than try to hold on for a potentially larger gain. It had a 35 point trading range intraday today (not counting any of the gap). I’m hoping they make the news and we have huge volume tomorrow.

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