Profit from This Shipping Stock Always Doing the Same Thing After Earnings

Core Viewpoint - United Parcel Service (UPS) has shown a pattern of stock behavior following earnings reports, with traders selling down into a gap, leading to a range-based formation observed in the last three earnings cycles [1][2]. Trading Strategy - The current trading strategy involves selling an iron condor, anticipating similar stock behavior in the upcoming expiration cycle, with support near $105 and resistance near$120 [2]. - A short iron condor consists of a short call spread and a short put spread, aimed at generating higher income while the stock remains within a defined channel [3]. Positioning and Profitability - The strategy aims to collect time decay as the stock stabilizes or shifts direction, relying on the average true range (ATR) and market makers' implied moves to estimate potential price movements [4]. - The maximum profit from the current position is $2.52, with maximum exposure calculated as the spread distance of$5 minus the collected premium of $2.52, resulting in$2.48 [5]. Probability and Risk Management - The probability of the short iron condor yielding gains is significantly higher, estimated to be more than five times as likely compared to other strategies, thus favoring trades based on probabilities rather than potential large gains [6]. - Three exit strategies for the trade include: buying back the short iron condor at a 50% to 70% profit margin, buying back at a predetermined loss threshold, or holding until expiration week, though the latter is rarely recommended due to potential rapid price movements [9].