Weekly chart on $NKE
I don’t talk about it much but I manage an account for my wife. Below is a list of her positions:
$AKAM cost basis: 63.7909
$AMED cost basis: 16.8999
$INTU cost basis: 89.359
$NKE cost basis: 74.2896
$OCR cost basis: 71.241
$TJX cost basis: 61.469
$SBUX owns a July/July 02w $50 Call Calendar
Note: There are options involved with $AKAM $AMED $OCR
I frequently plan for – and execute – trades that are designed to take advantage of a big price move at Earnings (the “catalyst”). Although most of the time I do trades near the event – prior day or day of – there are times where I want to plan for a run-up into Earnings. Here’s why:
1) Options are cheaper weeks before the event (IT has not ramped yet)
2) If you do get an UP move in price – and have a Bullish biased trade on – you get the benefit of price appreciation AND IV inflating
I have elected to take this approach with Nike as it reports on March 26. I will be using March 27 weekly Options:
The EPS graph above is a perspective that I use (I added the Asc Triangle myself) to help determine if there are any patterns. Next I review a Daily chart:
Now on to a few Trade Ideas:
Long the March 27 weekly 92/95/85 Risk Reversal Call Spread (RRCS). This trade should cost a $.25 debit. This trade takes margin (until the Short Puts are closed at least)
Long the March 27 weekly 92/95/97 Lopsided Call Fly. Wait to Short the Puts until you have a more solid floor (and I would likely use a nearer dated expiration too). This trade should cost a $.75 debit for the initial Call Fly
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:
The 6th man, MELI (Mercadolibre Inc.), continues to come off the bench with flashes of greatness. However, it can not sustain a close above 100. Nonetheless, I will continue to trade the stock in hopes of a sustained move and hold of the 100 Roll.
UA (Under Armour Inc.) is the newest member having been added this week. Here is the updated list with comments:
I have 2 stocks in the Fab 5 that have had a distinct difference in performance this week. Both have been on the team for quite some time, have completed the 100 Roll, and I have noted that they would be kept on with a tight stop.
The stock with continued Promise is NKE (Nike Inc):
The stock in a Pullback is PXD (Pioneer Natural Resources):
PXD did hit a trail stop on Monday, February 27, so that position is now closed. I do have MELI as the 6th man to pick up the slack. Good job PXD, the 100 Roll complete, and now time for a new participant soon.
Also SHW completed Day #3 this week – the 100 Roll is now complete there. I will leave in place for now with a tight stop.
I have removed ROP (Roper Industries) this week per my comment last week to give it one more week to perform. I have replaced it with DEO (Diageo PLC). One of the stocks, SHW (Sherwin Williams Co.) completed Day #2 of the 100 Roll on 2/24/2012 and looks good to carry that momentum into the coming week.
Called up MELI from the bench (6th man) to replace FDX as it hit a stop on the pullback on Friday (2/17). Both PXD and NKE had Calls sold against that expired – and will leave them in and do the same for March. ROP will be given one more week for the 100 Roll, otherwise it will be replaced. SHW did breach 100 on Friday but closed below – so close, battle stations!