$COO has been inside this Channel since March. For an Earnings trade consider the following:
Long the June 185/190/195 Call Fly
Short the June 175 Puts
Cost: $1.25 credit
Takes margin (until the short Puts are closed)
– DM 10:10 AM CST
I initiated an Earnings trade in $COO on 3/5/2015 (prior update can be viewed here):
One of the potential steps that exist in every trade is hedging with stock. In the case of $COO I had set a Buy Stop at $175 (middle of the Fly) as a hedge for the Top of the Fly (a short 175/180 call spread to keep it simple). The Bottom of the Fly is long 170/175 call spread.
The Buy Stop did trigger and the stock has continued to run up to the $185 level where it is consolidating. So now what?
In this scenario, I take the simple approach and do the following:
Each weekend I do a review of my trading activities for the week and it never ceases to amaze me as to the random volatility and opportunities that surface. The stocks in the Fab 5 certainly did not want to be left out of the action.
I came into the week with a full basket: $COO $MTB $NKE $PVH $TWC
The Cooper Companies drifted lower and looks a little vulnerable here hovering above the $93 level. It has a very short leash given there is no option collar attached at the moment. The position in M&T Bank was the only position not to survive the week as it hit a trail stop on November 7. It had a Collar on which then became a Bear Risk Reversal trade. Nike participated in the drift down as well but is holding above the rising Trend Line below. The November Collar is softening the pullback a lot.
PVH Corp was under some selling pressure as well but is holding the recent big gains rather well all things considered. The November Collar is doing its job, offsetting the loss on the stock position. Finally, Time Warner Cable went sideways this week. It too has a November Collar and like the other collared trades will need to be addressed this coming week as November Options expiration is upon us.
Here is the Summary:
This was a very unusual week for the stock market here in the U.S. as we saw 2 days of weather-related closure to begin the week. A lot of jitters were present as we opened Wednesday but the market seemed to hold together rather well – all things considered.
The Fab 5 saw a nice surprise this week in the $PVH position as it announced some M&A news acquiring $WRC in a $2.9 Billion dollar deal. Investors seemed please as the stock quickly moved through the $100 Roll level to above the $110 level. It ended the week at $111.12 and completed Day #3 of the $100 Roll. This is #22 with a Complete status in the Fab 5. I had a trail stop on the long stock position but elected to pull it and move the November Call strike up to the $115 level (was done at a -$5.95 debit net but allowed me to capture the price move on the underlying).
I had 2 empty slots to fill and elected to enter a new long position in the candidate $COO as well as the pullback candidate $NKE on 10/31. The Cooper Companies was one that I have been watching for a while so it was nice to finally get a comfortable entry. $NKE has taken a lot of patience and is the position that I will be the most nervous about. I have initiated a November Collar on this new position.
Since $MTB continues to work sideways, and it has a November Collar on it, I will let it remain in the Fab 5 until closer to expiration.
Here is the Summary: