Atlassian (TEAM) broke out above the 50-day moving average as it put in a 2.37% daily gain.
Today, we are looking at an unbalanced iron condor, with a slightly bullish bias.
This can be achieved by trading more put spreads than call spreads.
As a reminder, an iron condor is a combination of a bull put spread and a bear call spread.
First, we take the bull put spreads. Using the October 18 expiry, we could sell two put spreads with the $150-$145 strike prices. That spread could be sold for around $0.70. Selling two contracts would generate $140.
Then the bear call spread, which could be placed by selling the $190 call and buying the $195 call. This spread could also be sold for around $0.45.
Trading two put spreads for every one call spread gives the trade a slight bullish bias, but also more risk on the downside.
In total, the iron condor will generate around $1.85 or $185 of premium.
The profit zone ranges between $148.15 and $191.85. This can be calculated by taking the short strikes and adding or subtracting the premium received.
The maximum risk is $815 on the put side and $315 on the call side.
If we take the premium ($185) divided by the maximum risk ($815), this iron condor trade has the potential to return 22.7%.
A stop loss in this case might be calculated based on 25% of capital at risk, so a loss of around $205.
Below you can see the risk graph showing the profit and loss at expiration and also the T+0 line.
Company Details
The Barchart Technical Opinion rating is a 56% Sell with a Weakest short term outlook on maintaining the current direction.
Long term indicators fully support a continuation of the trend.
Of the 23 analysts covering TEAM stock, 13 have a Strong Buy rating and 10 ha a Hold rating.
Implied volatility is 36.74% compared to a twelve-month high of 70.55% and a low of 26.54%. That gives TEAM stock an IV Percentile of 21% and an IV Rank of 23.19%.
Atlassian is a global leader and innovator in the enterprise collaboration and workflow software space.
The company offers a suite of cloud-based software solutions, which help organizations, collaborate and manage their workforce, such that the teams work better together.
Initially, Atlassian's products were designed to help software developer teams communicate, collaborate, and manage the design and delivery cycle of software.
However, over the years, uses of Atlassian's solutions have expanded virally to teams across diverse industries.
With its sustained focus on developing new collaboration tools, the company now caters to the need of several corporate functions, including finance, legal, human resource and IT support.
Summary
Unbalanced Condors are a great way to play a neutral to slightly bullish outlook on a stock.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
