Weekly perspective shows one nasty plunge for price down thru the late 2012 lows. RSI is on life support at 18.69
I have an Earnings trade for $RRGB (reports BMO 8/11) and here are the details:
My Risk starts at $100 on the topside and $75 below. Quite a range to work with. This trade has a sweet spot of $95 at expiry.
Let’s look at a Daily chart first:
A Doji for $DIS has formed under the Rising 50 SMA but above the Breakout back-test level (defined by the horizontal Black line).
Now for some perspective – a Weekly chart:
Up trend remains in tact so likely an opportunistic Buy entry here for traders who have been waiting on a pullback.
Disclosure: I traded the stock in after hours on 8/4 but have switched to an August 28w 111/116/110 Risk Reversal Call Spread today for a post-Earnings trade.
I have 7 existing positions that include Options expiring today. Here’s the plan:
Caterpillar $CAT I am long the 85/82.5 Put Ratio. I am short stock at $82.5 (hedge). I will let this trade auto-unwind for +2.50 (thus closing this Submarine Basket position). The Options Net final will be: $4.91
priceline.com $PCLN I own the July 31w/Sep 1160/1230 Diagonal Call Calendar with short weekly $1140 Puts. I will take stock at $1160 with short September $1230 Calls (covered calls). The short weekly $1140 Puts will go poof. Options Net remains: $8.70 and booked stock gain remains: $4.22
Skyworks Solutions $SWKS I am short the 110/115 Call Spread – which I will let expire. Options Net final: $10.51 and booked stock gain: $2.27
Financial Select Sector SPDR $XLF I am long the ETF at $25.30 with short weekly $25.5 Calls (covered calls). Current Options Net: $.59. I will adjust to a future expiry
Baidu $BIDU I am long the 200/210/220 Call Fly and short the $180 Puts. I will adjust the short Puts to a future expiry. The long Call Fly goes poof. Current Options Net: $.69 and booked stock gain: $11.33 (from the hedge)
United Parcel $UPS I am long the 95/98/100 Call Fly and short the $93 Puts. I will: take stock at $95, adjust the middle of the Call Fly to a future expiry, StC the long weekly $100 Calls. Current Options Net: $.68 and booked stock gain: $1.47 (from the hedge)
LinkedIn $LNKD I am long the 230/240/250 Call Fly and short the $190 Puts. I think this whole trade goes poof today. Options Net: $.79 and booked stock gain: $36.225 (from tag along short in after hours 7/30)
One of the Option strategies I utilize for protecting a position short-term is the Collar Put Ratio (CPR). Here is what a CPR looks like using the Fab 5 position ($100 Roll) for $FB as an example:
I am long stock at $90.33 (since 7/16)
Here is the CPR:
I am short the August 07 weekly $95 Calls
I am long the August 07 weekly 95/87.5 1×2 Put Ratio (for every 1 contract that I am long the $95 Put I am short 2 $87.5 Puts). This takes margin
So let’s look at a Daily chart to see how this trade looks post-Earnings:
The black horizontal line represents the $95 level which is key for the Option portion of my trade. The long $95 Puts are ITM (in the money) so the long stock is protected well so far.
I have several existing positions that have Earnings AMC:
Here is an EPS graph on $BWLD via Estimize:
Note: You can view the specific trade info on the appropriate Positions tab.
The above graph is via Estimize showing the recent EPS information (I’ve added the Red horizontal line). Below is a Daily chart where I’ve added a horizontal line (black) showing where price is currently testing (50 SMA is joining in the fight as well):
Now armed with this information, what are trade considerations? Here are a few:
Long the 200/210/185 RRCS (Risk Reversal Call Spread)
Long the 200/210/220 Call Fly with short $180 Puts
Long the 195/190 Put Spread and short the Aug 28w/July 31w $205 Diagonal Call Calendar
Long the 195/190/185 Put Fly
Now that we are into the heart of Earnings season, my list of stocks that are getting beat up post-Earnings is growing. Although I have a full Submarine Basket at the moment – primarily where I would add new positions for these – I am considering creating a 2nd basket.
Here are just some tickers from the growing list of candidates:
$BIIB (I added to the Submarine Basket on 7/24)
There are also numerous pull-back candidates that are at interesting Buy points. Here are 2 well-known brands: