The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( Top Gun Options) -- Strategic Mindset: Earnings season is approaching for some heavies both in tech ( Google ( GOOG)) and the financial space ( Goldman Sachs ( GS), Bank of America ( BAC)). And while these industries don't appear similar on the surface, they do tend to impact the overall market sentiment and direction.
As stated above we're looking to stay in this trade through earnings to potentially collect the max credit. Threats: GOOG is a bucking bronco around earnings. You can literally feel the market hold its collective breath waiting for the announcement. This fuels the run-up in volatility. Once earnings are announced the stocks moves one way or the other and we see a volume crush. Exit Tactic: Reverse the entry position by buying back the two spreads to close. Firing Line: We selected a bull put and bear call spread $5 wide to help us manage risk. If we wanted to take more risk and potentially take in more of a credit we could've selected $10 wide strikes. But this increases our risk significantly. We're comfortable with $5 wide strikes and if the stock gaps up or down through one of our short strikes, we will close that leg as quickly as possible to limit loss. As always at Top Gun Options we close a trade if our Commit Criteria change for any reason.