Threads of Volatility: A DOTM Conexity Play on PVHStitched for a Breakout: A DOTM Conexity Thesis on PVH Ahead of Earnings
Thesis Overview
PVH Corp. (NYSE: PVH) presents a compelling high-convexity options play as it approaches a long-term ascending support line ahead of its Q4 earnings release on March 31, 2025. With the stock trading at $64.34, technical indicators suggest a potential inflection point — and options markets have yet to fully price in the magnitude of a possible breakout or breakdown. This creates an opportunity to structure a limited-risk, asymmetric payoff using a Deep Out-of-the-Money (DOTM) strangle.
Technical & Volatility Context
Multi-year trendline support remains intact, historically leading to outsized reversals or continuations.
RSI near 37 suggests oversold conditions with potential mean reversion.
Implied Volatility (IV) on April options is hovering around 48–52%, modest given PVH’s history of 7–15% single-day moves post-earnings.
Strategy: DOTM Strangle
Expiration: April 17, 2025 (17 days after earnings)
Position:
Long 3x $60 Calls @ $2.30
Long 3x $55 Puts @ $1.10
Total Premium Outlay: $1,020
This strangle positions the trader for a large directional move without bias, capitalizing on any post-earnings volatility expansion.
Breakeven & Move Requirements
Strike/Target Price % Move from Current
Call Strike $60.00 –6.75%
Upper Breakeven $63.40 –1.46%
Put Strike $55.00 –14.52%
Lower Breakeven $51.60 –19.80%
This structure reflects an attractive skew, as the stock is already below the call strike, reducing the upside breakeven distance. On the downside, the wider move required is offset by stronger historical downside volatility patterns.
Payoff Dynamics
The maximum loss is capped at $1,020, while gains are uncapped if PVH exhibits a strong directional reaction to earnings. The trade benefits from:
A breakout above $63.40, where the calls gain exponentially.
A breakdown below $51.60, where the puts pay out.
Any unexpected catalyst or revaluation that increases realized volatility relative to the current IV curve.
Conclusion
With earnings serving as the primary catalyst, PVH is poised at a technically and psychologically critical level. The DOTM strangle offers an elegant, defined-risk play on the stock’s volatility expansion, with significant upside potential. For traders seeking asymmetric setups into earnings season, this is a thesis worth stitching into your watchlist.
