Shopify ($SHOP) Earnings Trade Setup – May 8, 2025

This trade alert focuses on a neutral earnings play for Shopify ($SHOP) with an options expiration of May 9, 2025. The strategy uses a wide Iron Condor to take advantage of elevated implied volatility while maintaining defined risk.

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1. Key Earnings and Macro Context

- Earnings Date: May 8, 2025 (Pre-Market)
- Revenue Estimate: $2.33B | EPS Estimate: $0.26
- EPS Revisions: Net negative sentiment (7 upgrades vs. 20 downgrades)
- Macro Risk: China tariffs could affect merchant sentiment and growth
- Historical Volatility: Avg move ±15.5% vs. current implied move of ±11.8%.

2. Technical Overview

- Current Price: $97.73
- Resistance: ~$110 | Support: ~$76.86
- Momentum: RSI and MACD suggest moderate bullish tone but nearing resistance
- IV near 111% → ideal for premium-selling strategies

3. Trade Plan – Iron Condor

This trade uses wide strikes to allow for SHOP’s historically larger-than-expected earnings moves:

Short Iron Condor – Expiry: May 9, 2025
- Sell $115 Call @ $0.79
- Buy $120 Call @ $0.44
- Sell $75 Put @ $0.30
- Buy $70 Put @ $0.25

→ Total Credit: $0.40 per contract ($40 max profit)
→ Max Loss: $460
→ Break-even Range: $74.21 to $115.79

4. Profit Target & Risk Management

- Target: Close for 50–60% max profit (~$20–$25 per contract)
- Stop Loss: Exit if SHOP breaches either short strike ($75 or $115)

5. Execution Example (Live Market)

Below is a screenshot of the current setup in Robinhood at market open on May 5, 2025:

Note: This Iron Condor is set up on the conservative side, given the current state of the market and Shopify’s expected earnings move. Readers should exercise their own judgment based on individual risk tolerance. You may choose to widen or tighten the strike distances depending on your own market bias and risk profile.

Final Thoughts

This setup aims to capitalize on inflated options pricing around earnings while maintaining a risk-defined structure. It's ideal for short-term income with a neutral bias. Adjust strikes or avoid entry if IV drops or SHOP begins trending strongly.

Disclaimer: This content is for educational purposes only and not financial advice. Please do your own due diligence before entering any trades.