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

The rhyming market

An important chart to watch at all times is the NYSE New Highs-New Lows. This chart will give you a quick view of the overall price activity for the NYSE and will clearly make visible the extremes for which the market moves.

We are at an extreme now:

$NYHL_B

Weekly chart

If you believe that history repeats – more accurately rhymes – then now is the time to create a Buy list.

 

– DM 9:40 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

 

July 24 weekly Options expiration

I have 6 positions that include Options for the July 24 weekly expiration:

$AXP  I own the 78/79.5/81 Call Fly (which looks to go poof). Options Net: $1.63 and booked stock gain of $.29

$MU  I am long at $18.75 with a 19/17.5 Put Spread. I will likely adjust this PS to a future expiry. Options Net: $1.95

$MA  I am long at $92 with short $94 Calls (covered calls). Fab 5. I will adjust the short Calls to a future expiry. Options Net: $3.52

Earnings:

$IBM  I own the 175/177.5/167.5 RRCS. I am short stock at $170.44 as a hedge. Options Net: $.25 This trade should auto-unwind for +$3.19

$CMG  I own the 675/695/620 RRCS.  I am considering adjusting the short $695 Calls to a future expiry & taking stock at $675. The short $620 Puts will go poof. Options Net is currently: -$.46

$GPRO  I am short the 65/55 Strangle and long stock at $63 (hedge). If this does not get called away then:

The short Strangle goes poof
I will consider keeping the stock & sell premium against it for next week
Options Net is currently: $.41

 

– DM 10:25 AM CST