Options

[_______]

Originally Posted by barn32

I just put on earnings trades for seven different stocks that all report this week.

All but the ORCL 48/50 spread, which I've had on for almost two months now are "one for one," or "in-out" spreads. With the underlying at say, 100, you would buy the 99 put and sell the 101 put (one in the money, and one out of the money) trying to get as close (or over) a $1.00 credit as possible. You are risking $1.00 to make $1.00, more or less.

Some of these I had to "fudge" slightly to get the $1.00 credit.

You can do these with puts or calls. With puts you get a credit and with calls you have a debit.

All of these except Adobe are put spreads.

In LEN I couldn't construct a decent spread, so I bought JULY calls instead.

I have seven spreads and two outright call positions.

I bought one 6/23 212.50 FDX call for 3.40 so we are both looking for earnings that beat on that one.

For me this is fairly silly because the in/out transaction costs will be over $11 so I need 3.52 just to break even. I'll be out Wednesday morning one way or the other.

[barn32]

Originally Posted by _______

I bought one 6/23 212.50 FDX call for 3.40 so we are both looking for earnings that beat on that one.

For me this is fairly silly because the in/out transaction costs will be over $11 so I need 3.52 just to break even. I'll be out Wednesday morning one way or the other.

The only problem I have with buying weekly options on an earnings play is that even if it beats the vol crush could destroy any profits. Unless of course, it beats big time.

That's why in the two stocks where I did buy calls I went out one month.

[barn32]

I bought ICLR yesterday near the close, and also purchased 2 calls one of which I've already sold. The stock has already made a nice move today.

This morning I sold a covered call against my long stock.

[barn32]

Even with the $100 Million dollar infusion yesterday from Time Warner, SNAP continues to fall. (It did go up good yesterday on the news.)

I sold one of my options a few days ago and I'm letting the remaining one run. How far it will fall is anybody's guess.

[barn32]

My original intention with the earnings plays was to do the following:

1. Buy 2 weekly options expiring on Friday
2. Buy 2 monthly options expiring July 21
3. Put on 2 one for one spreads for each stock.

Then, because I had some skin in the game, I could compare the various outcomes for future reference. But in the end, I got conservative and only did the one for ones and purchased options in just two of the stocks.

My biggest concern was about the vol crush on the weekly options. FDX is a good example. The stock could go up a point or three, but you could lose money on the weeklies when the volatility gets sucked out.

If I had actually done everything I originally intended, I'd know exactly how things played out. When I don't get involved I get too lazy to go back and check.

Four earnings plays came in today and they all beat.

LEN
ADBE
RHT
FDX

ADBE and RHT were home runs, but I only had extra calls on ADBE. (I think Red Hat is up eight or nine points in after hours. Adobe is up five or six.)

Luckily, I exited my LEN right near the top early in the day.

FDX is barely up, but the one for one should succeed.

ORCL and KMX report tomorrow and BBRY on Friday.

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118 trades made, 78 closed out.

Closing trades cashed for $3300, and the open trades are losing $1700.

Last two or three days have been good.

55 open trades

24 winners, 31 losers

The ROI for all of the closed trades is running right around 12.5%

[barn32]

Just took a shot on Canada Goose (GOOS) This stock is a newer IPO that was issued in March.

It had a good turn around today on spike in volume. Hope it flies away.

Thinking about taking a shot in Kroger (KR). What, is this AMZN/WFC deal going to put them into bankruptcy? I buy Kroger products.

On the option front FDX looked like a 100% loser and it turned around and could be a 100% winner.

KMX (Carmax) looked like a 50 to 100% winner and now it looks like a 100% loser. All I can do is hold on till Friday and hope it spikes up again. I don't really think it will because KMX was down $2.50 yesterday (normally, but not always a bad sign before earnings) and that is all the more reason I should have got out on the upward spike this morning (it was up $3.00 at one point and now it's down 50¢)...I just wasn't nimble.

You have to be nimble after earnings are announced because in many cases after a big spike up (or down) they will give back. It's not always the case, but it happens a lot. Sometimes, when they report after the close there will be a big spike only to see it evaporate by the time the market opens.

Got out good on my long ADBE (Adobe) options, (in this case I was nimble) still in the spread.

I think ORCL (Oracle) will beat, (famous last words), so I bought some stock and one more august call, and I scalped some NVDA. I closed out my last call in CBI (Chicago Bridge and Iron for a ~100% gain.)

This day started out really well, up about $800, and now I'm up about $400. Aye, yai, yai, yai,yai.

[barn32]

I've been making the cash register ring this morning, but pretty soon it's going to be ringing in the other direction.

I have a lot of losing positions just sitting on the books waiting to be closed out or expire.

[barn32]

You can see what I mean right here.

[barn32]

Weekly Options Summary:

Good week for earnings plays. Bad week for other positions.

I had 11 earnings plays for the week. 10 with options and 1 with stock. All of them are closed out now and the options plays are up +$1878. [The stock play was up $195.] There were 8 winners and 1 loser. [Options]

ADBE July 21, 1, 140 call +$364
ADBE June 21, 1, 140/142 bull call spread +$101

ORCL July 21, 4, 48/50 bull put spreads +$660
ORCL Aug 18, 1, 46 call, +$302
[ORCL 50 shares +$195]

FDX june 23, 1, 207.5/210 bull put spread +$98

KMX june 23, 1, 61/63 bull put spread, +$48

RH June 23, 1, 90/92 bull put spread +$106

LEN July 21, 4, 57.5 calls +$308

BBRY June 23 10/12 bull put spread, -$109


Invested $1878

Profit $1810

Weekly Earnings ROI 96.37%


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Total option plays since I started posting have cashed out for +$4975

Open option positions are down -$2900.

I'm showing a net gain of +$2075 and an ROI of 17.63% on closed positions--13.21% on all positions.

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[barn32]

Three earnings plays for this week:

MU, 2, july 14, 32/34 bull put spreads, -1.04 (credit)

PAYX 2, july 21, 60 calls 1.20 (debit)

KBH 1, july 24, 22/24, bull put spread, -1.12 (credit)

[barn32]

For what it's worth, I'm the most confident about my MU earnings play, so I added 50 shares of stock @ $32.42, and I bought one AUG 18, 33 call for $2.13.

That should be it.

[barn32]

Not a good day. Was horrible, but came back some. Was down ~$1100 at one point and ended up being down ~$350.

I can't wait to get out of most of these trades and concentrate more on earnings plays. Earnings season will get into full swing about mid-July so I want to be ready. It's a lot of work.

Closed out some big losers, which were originally intended as hedges, but ended up being nightmares instead. The mistakes I made hedging are too painful to even think about. I know what they were. In one case I turned a decent winner into a big loser. From +$200 to -$700. And that's just one. I thought I was being smart and it turns out I was being incredibly stupid.

Needless to say I won't make them again.

All of the errors I've made so far including the FFMs could pay for a nice vacation.

41 open

15 winning

26 losing

Currently up about ~$1500. ROI about 12%/9%.

[Tape Reader]

bot10SPY628c242 0.51

[barn32]

Originally Posted by Tape Reader

bot10SPY628c242 0.51

I hope that's a winning trade for you.