New Income trade and Vol crush

So first let me preface with the fact that I learned my lesson with the NFLX trade not to go to big on this type of play. And to also consider movements outside of the expected move. With that said I would like to sell the Apr 310/300/410/400 Iron Condor in ISRG. IWO reccomended a similiar trade in May which I may also take in addition to this one. But I am looking to generate a little bit of income and try to take advantage of a possible volatility crush in ISRG as they report earnings on 4/15. See Historical Vol vs Implied Vol below from livevol.com:

IV is trading at about 43 vs a historical of 16. So there is 27 point variance. Below I have the daily chart for ISRG and have highlighted in grey the profitability zone for this trade. It has about a $90 zone of profitability with 2 weeks to expiration. It has about 36 points to the downside or 54 points to the upside.

As IWO stated in his thesis for the trade he did not believe ISRG was going to have as big of a gap based on the past few earnings and the recent run. I am going to bank on the same hypothesis. Below is the risk profile for the position. I dropped in the probabilities of it finishing within in the difined range and this thing has a 91.32% chance of finishing between 320-372.

As you can see from the above I am looking to sell 2 Iron Condors in ISRG for a limit price of $1.72 or a total credit of $344.

Total Risk: $1,662
Total Reward: $344

RoR: 20.7% for 2 weeks

Expected return based on the probabilities is about $170 ( p(success, 91.32%)*344-p(failure, 8.68%)*1,662))

Comments

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