$ABBV Options Intelligence

🎯 SELL ABBV NOV 21 230/240 CALL SPREAD

I recommend selling a bear call spread because AbbVie’s current implied volatility (IV) is extremely elevated at 36.6% with an IV Rank of 100%, indicating expensive options premiums ideal for selling premium. The term structure shows near-term expirations have higher IV than longer-dated ones, favoring premium collection strategies. The stock is currently at $227.26, just below the 20-day moving average ($230.74), and technical indicators like RSI (51.53) are neutral, suggesting limited immediate upside momentum. Additionally, the next earnings on October 31, 2025, are just 7 days away, so selling premium on the post-earnings expiration (Nov 21) captures elevated volatility without the risk of early expiry.

Sell ABBV Nov 21 230/240 Call Spread
Stock Price: $227.26 | Entry: Sell 230 Call, Buy 240 Call for net credit around $3.00 (estimate based on IV and typical spreads)

📊 Trade Metrics

• Max Credit: ~$3.00 per share ($300 per spread)
• Max Risk: $7.00 - $3.00 = $4.00 per share ($400 per spread)
• Breakeven: $233.00 (230 + 3.00) at expiration
• Max Profit: Keep full credit if ABBV stays below $230 at expiry
• Max Loss: Occurs if ABBV rises above $240 at expiry
• Win Probability: High, given neutral technicals and resistance near 230-231 level
• Days to Expiration: 28 (Nov 21 expiry)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Vol: 21.7%
• Current 30-day Clean IV: ~31-32% (fairly priced but elevated vs baseline)
• Market IV: 36.6% (high) with IV Rank 100% (strong sell premium signal)
• Earnings Multiplier: 4.33x (very high, indicating expected big move at earnings)
• Recommendation: Sell premium on post-earnings expiration to benefit from IV crush and time decay after earnings event

📈 Greeks & Volatility

• Delta of short 230 call ~0.40, long 240 call ~0.15 (net short delta, bearish-neutral)
• Theta positive for seller, capturing time decay
• Vega negative, benefits from IV contraction post earnings

🎯 Why This Trade

The term structure shows elevated IV due to upcoming earnings on 10/31, with a strong premium priced into near-term options. Selling the Nov 21 230/240 call spread captures this premium while limiting risk with the 240 strike as a cap. AbbVie’s stock is slightly below the 20-day MA and RSI is neutral, indicating limited near-term upside. Institutional confidence remains solid, but the recent mild pullback and HSBC downgrade suggest resistance near current levels. This spread benefits from time decay and volatility compression after earnings, with a relatively high probability of retaining most or all premium.

📊 Pro Analysis

• Current IV 36.6% vs Historical 12.4% (very elevated)
• Put/Call Volume Ratio 0.09 (very bullish in calls, but we sell calls above current price)
• Market Maker Max Pain 240 (close to upper strike, supports price resistance)
• Technical: Price below 20-day MA, MACD bearish, RSI neutral
• Dividend yield 2.89%, ex-dividend recently passed (Oct 15) so dividend risk minimal
• Sector peers like PFE, JNJ steady but ABBV shows mixed signals post earnings miss in July

🔍 Earnings Date Check

Earnings: October 31, 2025
Expiration: November 21, 2025 (AFTER earnings, capturing post-earnings volatility drop)
Validation: ✅ Expires AFTER earnings to capture volatility crush and avoid early expiry risk

💡 Trade Management

• Entry: Place limit order to SELL Nov 21 230 call and BUY Nov 21 240 call spread for ~ $3.00 credit
• Target: Close spread at 50-70% of max profit (~$1.50 to $0.90 debit) after earnings volatility crush
• Stop: Consider closing if ABBV breaks above $235 before earnings or if IV drops sharply before earnings
• Time Stop: Close before Nov 21 expiration if price approaches 240 strike

🔒 Pricing Validation

• 230 Call intrinsic value: max(0, 227.26 - 230) = $0 (OTM)
• 240 Call intrinsic value: $0 (OTM)
• Spread max loss = $10 - credit received = $7 (spread width) - $3 (credit)
• Bid/Ask spreads consistent with high IV and liquidity

🔍 Market Overview

AbbVie is in a phase of moderate short-term consolidation after recent gains fueled by new drug approvals and manufacturing expansions. Despite a slight pullback today (-0.43%), institutional investors remain confident in its long-term growth prospects. The stock trades above the 200-day MA ($198.30), signaling overall bullishness, but the near-term technicals suggest resistance near $230. The upcoming earnings on October 31 carry high uncertainty, reflected in the elevated IV and earnings volatility multiplier of 4.33x. The Fed’s upcoming rate decision (Oct 29) and macroeconomic data may add to short-term volatility. Given this environment, selling premium with defined risk on the post-earnings expiration balances reward and risk effectively.

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Confidence Level: Moderate-High
This trade benefits from very high IV and time decay post earnings, with defined risk. The main risk is a strong upside breakout above $240, which is less likely given current technical resistance and institutional positioning. The trade is well-suited for traders comfortable with limited risk and willing to manage post-earnings volatility dynamics.