VeriFone Systems, Inc. (PAY) is an IT services and consulting firm engaging in electronic payment solutions. The stock is currently trading around $33.00 in a 52 week range of $22.60-$38.26. The stock has been outperforming the market this year with shares rallying more than 23% year to date. The company is set to report earnings after the bell today.
PAY has been relatively strong on earnings day with shares rallying 5 of the past 8 quarters with an average move of 9.8% on earnings day. PAY is currently trading inside the Ichimoku Cloud meaning it is in neutral territory. The options market is currently implying a move of $2.50 by expiration. With the neutral chart setup I am looking to fade the move in PAY on earnings. I cannot sell a straddle because I do not want to risk blowing out my account. Instead I will look to use a strategy called an iron butterfly.
Trade: Selling the PAY Dec 30-33-36 Iron Butterfly for $2.00
Risk: $100 per 1 lot
Reward: $200 per 1 lot
Breakeven: $31.00 and $35.00
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