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

 

 

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

Earnings Trades update

We have officially kicked off the new Quarter Earnings season so I expect to see my focus continue to increase in this area of my trading. I was light this week on new trades but will end the week with new positions (left over short July pieces) in $PSMT & $TCS.

Here is the Summary:

07122014

 

Position Updates

I did an update earlier this week summarizing the trading activity this week here and all the newly added positions survived to the weekend (exception is $LL but I already noted that it was exited).

Submarine Basket:

Earnings:

50/50 Basket update was done on the blog Thursday. No material changes on Friday.

Here is the Summary:

Positions_07122014

 

Position Updates

Noted activity in the my personal accounts

Although this was a holiday shortened week, I was fairly active in the Swing account. Here are the newly added positions this week that survived to the weekend:

  • $ILMN   L July 175/185/170 Risk Reversal Call Spread
  • $VIPS   L August 200/220 Call Spread (LT account)

Exits:

Submarine Basket:

Earnings:

Here is the Summary:

Positions_07042014

 

Position Updates

a look at my Trading activity for my personal accounts

Here are the newly added positions this week that survived to the weekend:

  • $CTRP I am long stock at $56 with short July 60 Calls
  • $BWLD I own a July 160/165/155 Risk Reversal Call Spread
  • $SLB I own a July 03 weekly 110/116/110 Risk Reversal Call Spread
  • $ULTA I own a July 90/87.5 1×2 Put Ratio
  • $VRTX I am short at $102 with a July 90/90/100 Bear Collar Call Spread
  • $BBBY I own a July 03 weekly 56/57 Call Spread
  • $MPC I am long stock at $78.90 and short the July 03 weekly 80 Calls
  • $BKS I am short the July $23 Calls (2x) with a long stock hedge at $22 (and a Stop at 22.50)

Exits this week:

Earnings:

Submarine Basket:

Here is the Summary:

Positions_06272014

The Trade Process starring Accenture

In order to have a solid Trading Process a trader must be sure to evaluate each trade to see how it holds up to a variety of scenarios. For those that participate in Earnings trades this is especially important given that the reaction can often surprise.

I had decided to do a trade on Accenture ($ACN) for Earnings on 06/25 AMC:

ACN

Here is a breakdown of the trade:

  • I am long the June 27 weekly 83 Calls
  • I am short the June 27 weekly 85 & 87 Calls
  • This was done as a 1×2 Ratio
  • I am also short the June 27 weekly 78 Puts
  • This trade takes margin until Friday (or until the uncovered short pieces are closed)
  • This trade was done for a $.12 debit

The initial reaction this morning in pre-market action was positive but I still need a plan for exiting the trade with profit. I was surprised by a sudden fade in the stock price so I did the following as a next step:

ACN_B
This step – shorting stock to lock in some gains – has ended up being a much larger part of the profit in the trade as price has fallen to near the $80 level:

ACN_B

I have lowered the Stop on the short stock piece to $82 now (locks in $2.35).

Position Updates – 06/21/2014

Most of my focus was on existing positions since this was June Options expiration (monthly) week. I had a large # of positions both personally & for clients to tend to. A lot of exits this week as positions looked to be tired and/or had June Options that were ITM. A few newly added positions that survived:

Exits this week:

  • $AVGO long since 01/14/2014 in the Swing account
  • $BIDU (Swing account)
  • $BLUE (Swing account)
  • $CCE (Swing account)
  • $CLVS (Swing account)
  • $DTV (Swing account)
  • $MCRS (Swing account)
  • $NQ (Swing account)
  • $ADTN (Submarine Basket)
  • $CLB (Submarine Basket)
  • $DSW (Submarine Basket)
  • $DXPE (Submarine Basket)
  • $JBHT (Submarine Basket)
  • $V (Submarine Basket)

Earnings Trades:

Submarine Basket:

50/50 Basket:

Here is the Summary:

Positions_06212014