Through the looking Glass – a brief earnings trade review in Google

$GOOG announced earnings after hours on 7/18 and the stock sold off down to the $860 level before starting a very nice bounce overnight. I had put on a 1/2 position trade into earnings. Here are a few of my messages on @StockTwits related to this:

GOOG_earningsI often get questions regarding one individual message and I understand it is mostly impossible to track what one particular trader is doing in a trade when the stream gets so active. So, I like to do a Blog post to dissect things for those that ask about my approach, exit strategy, adjustments, etc.

Here is a breakdown of the trade:

  • I shorted the stock at 910.10 (a 1/2 size position)
  • I went long the July 910 Call at $17 (a 1/2 size position). This seemed cheap at 2% of the underlying to protect the stock piece if I was wrong

The stock did trade down post-earnings and I covered within a few minutes in the after hours session. This left me with Long 910 Call that looked worthless last night.

This morning however, things looked promising for more than just a mild dead-cat bounce. With that in mind, I did an adjustment today:

  • I bought the July 900 Call at $.40
  • I sold 2x July 905 Calls at .20
  • I already owned the July 910 Call

This makes this adjustment free and is now a common Call Fly.

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