Earnings Trades update

Now that we are in the heart of Earnings season, a great deal of my new positions are focused in this area. Newly added for this week so far:

  • $SANM  I am long the August 23/25 CS & short the August 24/20 Strangle on a 3:2 Ratio (for some clients)
  • $NFLX  The remaining pieces are: short July 25w 470 & 480 Calls, short the 400 Puts
  • $CNC  I am long the August 77.5/80 1×2 Call Ratio & long the August 75/72.5/70 1×2 Split Call Ratio (the Double Banger trade, look both ways)
  • $PII  I am long the August 135/140 Call Spread & short the 125 Puts
  • $VMW  The remaining pieces are: short July 25w 102 & 108 Calls, short the 88 Puts

 

An Earnings trade in Netflix

I’ve been getting questions today surrounding my $NFLX Earnings trade so I thought I’d do a brief review here. The trade:

  • Long July 25 weekly 450/470/480 1×2 Split Call Ratio with Short 400 Puts. This means I am long the $450 Calls & short the $470 & $480 Calls as well as short the $400 Puts
  • Trade was done for a $.35 debit
  • This trade takes margin

I have done a few stock short trades (scalps) in after hours.

So what now?

The ideal scenario for this trade is to drift up to near the $470 level by Friday expiration so that I can get optimum value from the long $450 Calls. The 2 levels I need to watch are $480 & $400 (any movement towards here and I have to be ready to hedge with stock or BtC the relevant short Options).

NFLX_earnings_trade

An Earnings trade idea in ManpowerGroup

I posted a trade idea on @Stocktwits earlier this week but wanted to follow up with a few data points. First, a look at the idea again:

  • Long the August 85/90 1×2 Call Ratio
  • Short the August 75 Puts
  • This trade closed at a $.20 debit Friday
  • This trade would take margin until the short Puts and one set of Calls are closed

Here is the Option chain info:

MAN_Aug_Options

As you can see above, the August $90 Calls have the largest Open Interest by far.

Here is the Daily chart:

MAN_b

A few scenarios to consider:

1) price moves above the $85 level but avoids $90. StC the August $85 Calls when you see price stall for your time-frame. This would leave the short 90 Calls (2x) and the 75 Puts (a Short Strangle) until closed

2) price goes nowhere. No harm, no foul. The small debit for this trade is your cost to participate

3) price goes down to the $75 level (near the April lows). If you are comfortable owning there (you did sell the Puts at that strike) then let the stock get put to you

 

 

The Fab 5 update ($100 Roll)

The Fab 5 basket saw a lot of activity this week which included tending to July Options that were set to expire. In addition, I added 2 new positions as subs: $AMT $MCO. I had one exit: $LYB for an overall gain of $6.71 (the short July 97.5 Puts expired worthless, kept premium collected) and it goes in to the Complete status category.

Here is the Summary:

07192014

 

 

Position Updates

This was a very typical Options expiration week with a few surprises along the way to my Plan posted last weekend. Aside from the focus on existing positions with July options, I did manage to add new positions that survive to the weekend: $CHL $INTC $KNDI $JPM $SWKS $CBI $GNRC.

Exits (primarily due to July Options expiration plan):

Earnings:

07192014

50/50 Basket:

Here is the Summary:

 

Positions_07192014

The Volume Bar buy signal

part of the Simple Approach series of blog posts

For traders that like to trade with simple triggers you may find this of interest. I use RSI and Volume Bars as Buy/Sell triggers and so I like to offer examples to show what I mean.

For an example using Volume Bars as a Buy signal I bring you $CAB:

CAB_volume_bars

As you can see above, I highlight several Buy points (blue vertical line). Here are the details:

1) Buy the next green Volume Bar – after at least 3 Red bars in a row

2) There have been 6 triggers so far with #7 in the works now

3) Use your own Stop and/or Risk parameters for exiting each trade that you would take

4) Trigger #4 is likely a loser

 

Chicago Bridge & Iron

part of the Big Footprints series of blog posts

I often state that Option flow is an increasing important data point in a trade decision – whether you actually trade Options or not. I see continued growth in what I call “big footprints” in the Option Chains daily and thought I would highlight $CBI this week.

Here is a Daily chart:

CBI_B

A Channel has formed over the past few weeks. Now on to a big footprint that someone left in the August option chain:

CBI_Aug_Options

One additional comment on this: I realize that there will be a variety of reasons for an unusual Volume day at a particular strike and/or chain. It could be someone rolling up, it could be a hedge, etc. My point here is to simply show that regardless of the reason – it is a big footprint.