Trade Idea - Naked Put on DGX

Disclaimer: The trades discussed in this blog reflect the author's personal strategies and decisions. These are not financial advice and should not be considered recommendations to buy, sell, or hold any financial instruments. The author is not a licensed financial advisor. Options trading carries significant risk, and readers should perform their own research or consult a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results.

Quest Diagnostics (DGX) just reported earnings and the print was solid, but for some reason the implied volatility did not crush the way you'd typically expect after a scheduled event. IV rank is still sitting above 80%, which is unusual for a post-earnings setup and exactly the kind of inefficiency I like to lean into when selling premium.

The Trade

Here's the trade:

• Sell 1x DGX 15 May 2026 $190 Put @ $1.50
• Breakeven: $188.50

For reference, here is the current price chart of DGX:

The stock is trading around $200 after a choppy pullback from the $220 highs printed in March. Price has reclaimed the 50-day moving average, and my $190 short strike sits comfortably below both the recent consolidation zone and the lower Bollinger Band. It's also a clean psychological level with a healthy buffer to current price.

As always, I lean heavily on cycle analysis to time my entries, and my work is pointing to a turning point here with the next leg biased to the upside. That fits nicely with the technical picture and gives me additional conviction to sell puts rather than wait on the sidelines.

The logic is straightforward: earnings are out of the way, the stock reacted fine, but IV has not deflated (it happens sometimes). That means I may be getting paid richer-than-normal premium on an event that has already passed. Theta has about 23 days to chew through, and with the catalyst behind us, I expect IV to drift lower over the coming sessions (unless something else happens, which I do not expect), and this would give me a nice volatility tailwind on top of the time decay.

Quest Diagnostics is a defensive, cash-generative business in the diagnostic testing space, not a name I'd lose sleep over owning. As always, I like to put myself in the worst-case scenario before trading: if the stock does take out $190 and I get assigned, I'm holding shares of a quality healthcare name at a meaningful discount to today's price. From there I could wheel it with covered calls or just sit on it.

As always, I have logged the trade in my trade log.