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.
EPS graph courtesy of Estimize (I added the Red lines)
– DM 11:10 PM CST
I have a short list of existing positions with Options expiring this week:
– DM 12:25 PM CST
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.
– DM 9:10 AM CST
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)
– DM 9:00 AM CST
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.
– DM 9:30 AM CST
There are 234 companies reporting Earnings today.
– DM 9:20 AM CST
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:
Note: You can view the specific trade info on the appropriate Positions tab.
– DM 10:20 AM CST
I do all my short-term trading off of a 5-minute chart. I keep it simple though with just Accumulation/Distribution and Volume turned on. No moving averages. The above is a “zoomed” view to show just today so far.
– DM 10:00 AM CST
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
– DM 10:40 AM CST
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:
If you believe that history repeats – more accurately rhymes – then now is the time to create a Buy list.
– DM 9:40 AM CST