A trade review in General Mills – still in progress

I started preparing early for an earnings trade in $GIS this week and posted this chart a few days ago as one perspective to consider:

GISTo ensure that I have an objective view, I make the effort to create other charts to consider. Here is another showing a Channel:

GIS_BA key step in my process is to review the Option Chains to look for clues on what the market is thinking/expecting. The Open Interest is usually a very good place to review – lots of clues come from there.

I ultimately settled on the following trade (although I did post another trade idea this weekend):

GIS_earnings_tradeHere is a breakdown of the trade I initiated:

  • I am Long the July 48 Put
  • I am Short the July 47 Put
  • I am Short the August 46 Put
  • This is a 1×2 Ratio in that I am short 2 times the amount that I am long

Trade rationale was this:

  • I expect short-term weakness so want to participate in that
  • I expect a rebound or a price level to be defended, maybe a bounce but ok if it just churns
  • I wanted a trade for Free or better

Now on to where I am at the moment. This morning in pre-market the stock reacted in a mildly negative way so I elected to plan on selling the Long July 48 Put – thus leaving me with just the Short Put pieces. So far the $48 level has held ok so this approach is working good.

My cushion is currently at $1.01 with the July 47 Put level what I need to monitor.

One thought on “A trade review in General Mills – still in progress

  1. Trade update: the short July 47 Puts look to expire next week as price is currently hovering near the $50 level. This will leave the remaining short August 46 Puts.

Leave a Reply

Your email address will not be published.