Gourmet Burgers

I have an Earnings trade for $RRGB (reports BMO 8/11) and here are the details:

  • Long the August 90/95/100 1×2 Split Call Ratio
  • Short the August $75 Puts
  • Cost:  tiny credit
  • Takes margin

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.

RRGB

EPS graph courtesy of Estimize (I added the Red lines)

– DM 11:10 PM CST

 

Earnings reaction in Walt Disney

Let’s look at a Daily chart first:

DIS_C

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:

DIS_weekly

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.

– DM 9:10 AM CST

July 31 weekly Options expiration

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

Earnings:

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)

 

– DM 9:00 AM CST

 

The Collar Put Ratio starring Facebook

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:

FB_G

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.

– DM 9:30 AM CST

Earnings preview

I have several existing positions that have Earnings AMC:

  • $BWLD (Submarine Basket)
  • $PNRA (Submarine Basket)
  • $GILD (own for some clients)
  • $IACI (Swing account)
  • $ESRX (IRA account)

Here is an EPS graph on $BWLD via Estimize:

BWLD

Note: You can view the specific trade info on the appropriate Positions tab.

– DM 10:20 AM CST

Baidu earnings preview

BIDU

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):

BIDU_H

Now armed with this information, what are trade considerations? Here are a few:

If Bullish

Long the 200/210/185 RRCS (Risk Reversal Call Spread)
Long the 200/210/220 Call Fly with short $180 Puts

If Bearish

Long the 195/190 Put Spread and short the Aug 28w/July 31w $205 Diagonal Call Calendar
Long the 195/190/185 Put Fly

– DM 10:40 AM CST

Bottom Fishing

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:

$UTX
$LXK
$PII
$CAB
$COL
$TEN
$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:

$FDX
$UPS

 

– DM 9:30 AM CST

 

Earnings preview – Tuesday 7/21 AMC reports

http://finviz.com/screener.ashx?v=111&t=MSFT,YHOO,CMG,AAPL,VMW,ISRG,GPRO,ILMN,LLTC,IRBT,PKG

The link above is quick way to view data on the key Earnings reports scheduled for after hours today, Tuesday 7/21/2015. Here are some trade ideas to consider if you have no position now:

Apple $AAPL  Long the July 24w 130/135/125 RRCS (existing stock position for some clients already)

Yahoo $YHOO  Long the July 24w 40/37 Put Ratio

Chipotle $CMG
1) Long the July 24w 675/700/725 Call Fly with Short $630 Puts
2) Long the July 24w 675/695/620 RRCS

Microsoft $MSFT  Long the July 24w 47/49/51 Call Fly with Short $45 Puts

VMware $VMW  Long the July 24w 85/88/91 Call Fly with Short $80 Puts

Intuitive Surgical $ISRG  Long the July 24w 500/520/540 Call Fly with Short $480 Puts

GoPro $GPRO  Long the July 24w 60/65/55 RRCS

Illumina $ILMN  Long the July 24w 235/245/255 Call Fly and Short the $220 Puts. (existing stock position for some clients already)

Package Corp $PKG  Long the August 65/62.5 Put Ratio

 

– DM 10:00 AM CST