In late June we placed a trade looking for cloud based human resource software provider WDAY to find support around the 80 level after a selloff. Since that time the stock failed at that 80 level but has just recently broken back above that level, and yesterday the stock was up over 3% on an upgrade and a 95 price target from Evercore. Here was the original trade:
Trade: WDAY ($81.10) Buy July 80/85/90 Call Butterfly for 1.40
-Buy to Open 1 July 80 call for 3.00
-Sell to Open 2 July 85 calls at .95 each, or 1.90 total
-Buy to Open 1 July 90 call for .30
Today, with the stock at 83.20 the fly is worth 2.80.
But now the stock is near it’s declining 50 day moving average and even though a run to the 200 day moving average closer to 85 is possible this week, with expiration days away and the trade almost 100 deltas we’re going to be thankful that we got a second change on this and take the profits:
ACTION- WDAY ($83.10) sold to close the July 80/85 1×2 call spread at 2.80
– Sold 1 July 80 call at 3.10
– Bought to close 2 July 85 calls for .15 (.30 total)
(the 90 calls are zero bid so we will let them expire worthless).