As we head into the heart of Earnings season, my focus on this segment of my trading increases – it is where I find some of the best opportunities for new trades. I use Options as a key component to most trades for a variety of reasons: lower capital requirements & the flexibility to participate in the post-Earnings price reaction.
It is an important step for each trade to do a thorough review – and sometimes I like to share that info along the way (from trades that are still in progress). I have 2 new trades that I did yesterday and I thought I would review where things stand now that the Earnings event is over.
I am Long the October 24 weekly 91/95/82 Risk Reversal Call Spread
This means I am long the 91/95 Call Spread and short the $82 Puts
This trades takes margin this week (or until the short naked Puts are closed)
The trade was done for a .05 debit
The above chart shows the close from yesterday. The current price in pre-market trading is $84 so I will need to monitor the short Put strike. It does not appear that I can get any value out of the Call Spread.
This means I am short the $160 Calls (covered by stock) and long the 145/135 Put Ratio (1×2)
This trade does take margin due to the Put Ratio (until at least 1x of the short $135 Puts are closed)
This trade was done for a .55 credit
The above chart shows the close from yesterday. The current price in pre-market trading is $149 but there has been very little volume (normal for this stock). With this trade design I can participate on any move up to $160 and I am protected down to $135 (+/- the credit received).