Position Updates

A mild trading week for me as I focused mainly on just a few select Earnings trades. Newly added this week (didn’t survive to the weekend though): $HLF $KRFT $GIII $PVH. The $SWKS position survived the short-term semi correction fine primarily due to the Option protection that I have in place – I just let the position ride.

Qualys $QLYS  I added an April 45/40 1×2 Put Ratio on 3/23 (to provide some protection for Long stock). Long-term account

50/50 Basket:  there are no open positions at this time

Here is the Summary:


- DM 9:30 AM CST


Submarine Basket update

Material changes to existing positions:

American Express $AXP  I exited the trade on 3/25 for a gain of $2.52

Tiffany $TIF  I had a Buy Stop hit on 3/23. I set a Stop on 3/25 at $88.25 and this did hit later in the day. The Call Fly for April remains

Wynn Resorts $WYNN  I BtC the March 27w $135 Calls for .08 debit on 3/25. The Short stock at $131 and April 10w 134/131 Bear Collar remains. Options Net improves to: $5.00

Remaining positions that held up fine this week, no changes: $BBBY $BWA $EXPE $PNRA $RENT

Note: The $KR position remains


- DM 11/15 AM CST


Options Expiration for March 27

Herbalife $HLF  I am Long the 45/43 1×2 Put Ratio and Short stock at $43 (hedge). I will let the Long PS auto-exercise for +2.00 and the remaining Short $43 Puts will assign, closing the Short stock at B/E. Options Net final will be: $2.08

ProShares Ultrashort 20+ Year Treasury $TBT  I am short the $45 Calls (covered). I will adjust to future expiration today (2 weeks out likely) for a credit, try to boost the Options Net above $2.00


- DM 11:00 AM CST


Earnings Trades update

Newly added this week:

Red Hat $RHT  I am Long the April 70/72.5 Call Spread (the short $62.50 Puts have already been closed). 1st week rule exception

PVH Corp $PVH  I own the April 105/110/115/95 Risk Reversal 1×2 Split Call Ratio (another way to view this trade: Long the 105/110 CS & Short the 115/95 Strangle). 1st week rule exception

Signet Jewelers $SIG  I own the April 130/135/120 Risk Reversal Call Spread. 1st week rule exception




- DM 10:00 AM CST



Trade Idea in Red Hat


Red Hat is heading into Earnings AMC on 3/25. One thing I notice on the Daily chart above is that CMF is taking a peek under the 0 line. RSI turned down at 60 and is near the 50 line.

For the relevant Option chain – April 2015 – the $72.50 Calls have the largest OI by far at just over 10K contracts. The April $67.5 Straddle is pricing in a $5.75 move so expect price to be out of the apex of this Asc Triangle in after-hours trading.

The trade idea is:   Long the April 70/72.5/62.5 RRCS (Risk Reversal Call Spread). This means you BtO the 70/72.5 Call Spread and StO the $62.5 Puts. You must be comfortable owning at 62.5 or have stock hedging as part of your overall trade plan. This trade takes margin (until you close the Short Puts).

AMC = After market close
OI = Open Interest
BtO = Buy to Open
StO = Sell to Open

- DM 10:10 AM CST