Options Action

CNBC's Options Action program at 8:30 this evening had a couple of ideas related to earnings releases next week:

1) Costco options currently have a low implied volatility and earnings are to be released next week. The idea is a long strangle:
a) Buy the October 55 put
b) Buy the October 57.5 call

The assumption is that Costco will make a large move (and implied volatility may rise), but there is no way to know which way the stock will go, so buy both a call and a put.

2) Mosaic (MOS) will release earnings on Monday after the close. Creating a "condor" was suggested:
a) Sell 45 call
b) Buy 40 Put
c) Sell 50 Call
d) Buy 40 Put

All options in this trade have an October expiration.

I am a bit leery of condors. They work in the right circumstances, but it costs a lot in commissions to set these trades up, so a small profit will cover your commision with nothing left for you.