(META) is showing extremely high implied volatility Meta Platforms (META) is showing extremely high implied volatility in the lead-up to its earnings announcement on Wednesday.
There is also significant volatility skew, with short-term options showing much higher implied volatility than long-term options.
One way to take advantage of this skew is via a diagonal put spread. This option strategy is an advanced strategy because it utilizes options over different expiration periods and different strike prices.
e risk on the trade is on the downside, with a potential maximum loss of $995. This is calculated by taking the difference in the spread (10) multiplied by 100 and factoring in the cost (5).
The maximum potential gain is around $1,035. It would occur if Meta stock closes right at 300 on Oct. 27.
The trade has a nice profit zone between 280 and 370.
If Meta stock stays between these values, the trade should do well. The main risk is if the stock drops below 280.
