One of the key earnings releases this week was in $PCLN and I wanted to be sure to have a trade in place that could benefit from the expected move. The May 10 weekly 735 straddle had priced in a $43 move. I spent a fair amount of time throughout the day Thursday designing a trade that I was both comfortable with but could benefit from an upside move.
Here was the trade:
- Long the May 10 weekly 740/750 Call Spread
- Long the May 10 weekly 660 Put (1/2 position)
- Short the July 660 Put (1/2 position)
This trade was done for a $.35 credit and any upside move would be capped at the 750 strike (plus small credit). A downside flush would be protected by the long weekly Put. Important.
The plan for exit was obviously to benefit from an upside move and sell the call spread. After the release in the after hours trading session, I did short the stock for a small scalp to build a bigger cushion. The stock held up well the rest of the evening and this morning began to drift up once the pre-market trading opened up. A welcome surprise.
The plan was still the same:
- Work the long Call Spread for whatever value I could. It eventually went ITM (in the money) so the gain was capped and I exited
- The long weekly 660 Put will go poof this weekend
- I will remain short the July 660 Put for now (currently trading under $4)