Hi Traders, just a note to remind all that earning season is upon us. To me this is the most dangerous season. Your stock or one in its orbit reports bad or disappointing earnings and --your stock can fall like a bowling ball. So be careful! During this season if I have one of these stocks, i look hard at closing if there is any profit or unless I have lots of cushion...Cushion, always a comfort and it has save my butt many times..
Jerry
23 comments:
One way to avoid this is to trade options on indexes.
Phantom29, thanks for that information i may do that for FEB montly's
Jerry, how do you protect yourself from choosing a solid stock that does NOT have earings coming out, but one of their competitors or another company involved in the same area of sales/service has a bad earings report and now your stock is also dropping.
Good morning from Washington DC!! Cut my Asia trip short. Great to be home.
Laptop blacked out - one way or another trading can be put in jeopardy when on is on the road, just as Jerry said....So far FFIV 105 is safe :)
Happy and Prosperous 2011 to you all.
Hi Hannah,
Welcome back. Just a reminder for you, FFIV has a confirmed earnings date of 1/19/11, as per earningswhispers.com.
Ed
Thanks Ed..I am looking for opportunity to exit real soon.
Fulgore, There is no sure way without checking out ea company in the same field. I will look at some of the close competitors for earnings dates.
I try to pick a stock that doesn't depend on other stocks results to prove that my company is doing well.
Example; I know that AMZN dominates the field of on-line selling. The fact that Borders etc aren't doing all that well confirms that AMZN dominates. There was a time when DELL was like that. So you must be aware of trends. That is one reason I don't do teenagers clothing stores..Who can keep up with those trends?
Aother answer is simple...CUSHION. Don't crowd the strike price when rolling up or opening a position.
Hope that helps
ps; welcome back Hannah.
Jerry
105 FSLR is shakin out nicely so i will close my amazon puts for a nice profit.I am now going to sell 20 more puts on fslr. FSLR 110 prem .27 stock at 135.00 jan exp. earnings are on feb, 11.
I sold 25 110 FSLR @ .28 today.
18 % cushion with now 15 DTE & about 2.5% yield.
FSLR has found support at its rising 200dma recently. So far so good.
Ed
Hey fish - I was thinking the same but decided not to and to start looking for opportunities to buy the week of 1/17.
Good luck & go FSLR!!!
Mark
A very cool feature of using PowerOptions (www.poweropt.com) to screen for Crumbs candidates -- one of the possible screening criteria is "Earnings Date Not between now and expiration" and also "Ex-Dividend Date Not between now and expiration" -- also, in its reports, the Power Options output shows when both of these dates are scheduled.
This is just one of many terrific features of PowerOptions. I believe they offer a free trial if you're interested in test driving. Besides Naked Puts, you can do screens for just about any options trading style imaginable. I pay $600/yr and I can run my reports online anytime or have them emailed to me each morning.
BTW, I know I keep mentioning PowerOptions in a lot of my posts, and no, I do not work for PowerOptions. I just think it's such a terrific advantage being able to quickly screen for options that meet all the criteria (and better yet, screening out the junk), and then do instant links to charts, analysts info, probability of expiration, etc.
One of my favorite "Crumbs" screen lists only those options with a 95% or greater probability of expiration along with the rest of the Crumbs criteria. Another screen only filters for S&P 500 Five Star rated stocks. I have several that I run at different times, which quickly gives me a strong candidate list that I can more specifically research. Once I have my list, I look at the chart for up-trending, and I look at www.nasdaq.com to see what the consensus analysts research shows along with consensus target price. www.nasdaq.com shows a lot of other great information about any stock you want to research (including those on NYSE, too).
Please forgive me me in that I'll probably keep plugging PowerOptions -- it's just because I think that anyone who wants to be serious trader with a superior advantage in finding Crumbs Candidates will be glad they did.
Peace
Hey Ed nice trade. i have made several dollars on first solar and even though i dont much like solar it is at the top of its class. there p/e ratio is nice as well. hey newportnewsva i traded this becuase there isnt enough volatility to make anything happen for the weeklies that i saw. I won't touch netflix right now and amazon options are moving to darn slow.
Hi John,
Don't stop writing what you and PowerOptions have to say....It's never too much to read. High probability options - oh yes, we all want to see more alternatives!
Nice trade Ed, Glad to see you using a GREAT strike. Many put sellers would succumb to the temptation and go for the 120 or even 125's. They look at the bigger prem's and can't resist them. Sooner or later it catches up with them and spanks 'em.
I show their earning on Feb 18. It is a stock that you want to see if any other solars report before hand. There are people that are saying gasoline at $7 within a year or two. If so, solar will flourish.
Don't know if i can take much credit for all the great strikes and stock choices you guys (and dolls) are making, but I certainly enjoy seeing success without stress.
John, By all means this is a learning site for all to enjoy and learn. Don't hesitate to keep the post coming. These exchanges of ideas and support are what make for good site.
Regarding the site. When I first started this a couple of months ago i was getting 10-20 views a day. A steady progression of readers is rewarding for me. We are now getting over 500 views a day. I receive nothing for it just the fun of sharing and helping other succeed. And by the way I constantly learn for different post also.
Jerry
Fish, I don't know if you are really a 'fish' champion but the lady in your picture sure makes you a champion.
I'm considering a trade in Walter Energy (WLT JAN 115 PUT).
Stats:
WLT Thursday Closing Price = 135.49
WLT JAN 115 bid = .36
ROI Margin = 3.0% in 2 weeks (78% annualized)
WLT 115 PUT is 15% OTM (20+ pts) with just 2 weeks remaining.
Probability of Expiration = 95% (PowerOptions and ThinkOrSwim)
Chart is STEEP Up-Trending (maybe TOO Steep)
Above both 20-day and 50-day Moving Averages
Next Earnings = Feb 2
P/E = 23
www.nasdaq.com Analysts Target Price = 113.5 (a potential negative)
Pros:
15% OTM (20+ pt) Cushion with just 2 weeks remaining
Very Strong Chart
Earnings a couple of weeks following Jan expiration
Strong Sector
(see http://seekingalpha.com/article/244771-taking-a-look-at-the-incredible-run-in-the-coal-space?source=nasdaq)
Cons:
Greatest concern is that WLT is WAY overpriced (very high Relative Strength Index)
...but...will it sustain or at least hold steady for at least the next weeks??
I am going to see how WLT is doing in the morning and then make a trade decision. But right now, I am leaning towards pulling the trigger.
Comments????
Added SLV and TBT to the other instruments I trade, SPX, RUT, and /CL. Looking to diversify away from Crude and reduce risk.
John, i did the two week test drive with your options page. It also came up with WLT same strike. Hmmm WLT does look pretty good. but I will have to compare to what I find the old fashion way..lol
PhAn, I have to admit that I have never traded spx etc. A lot of traders do. I just never had a feeling for them as I don't follow the indexes.
Actually I could not tell you within 250 pts where the DOW is now. Sure is a lot of ways to trade. Well done to those that can learn all the different ways.
Jerry
I really like a trade I just made.......sold 7 jan 2012 csco leaps at strike price of 15. Collected $0.59 per contract.....maintenance required was 1470.....about a 25%-30% ROI.
Following up on WLT JAN 115, I watched it this morning, then decided to make the trade. However, the additional day eroded the premium, so the best I could get was .31 which is still 2.6% ROI on margin, in exchange for dealing with 2 weeks of time. The ProbOfExpiration is still around 95% and the cushion is 20 pts (15% OTM).
Even though I jumped in, I will still watch this position VERY close, since I do believe WLT is overpriced. I like that there's only 2 weeks left.
Hi Wire, if you like or want to use leaps, you might look at Apple, trading at 333 and the Jan 2012 230 has 103 point of cushion on one of the best stocks around. The premium is 8.35 and maintenance is around 31.35 This pays a little over 26% It is a great return (26% ann) plus on these leaps (or any) no tax until April of 2013.
For me I just have to have some plays instead of just watching. Of course, as in the example in my book, in three or four months you might close with a great profit. One problem with the CSCO leaps is the stock only trades about 5 pts over the strike. So there is hope for the other side right up until Dec of 2011. In other words the chance to close at a good profit is much smaller.
I am 'guessing' that AAPL with do a 10-1 split or some such thing soon. Just a guess..
Jerry
As luck would have it, WLT dropped 3 points since I sold the Jan 115.
Am I sweating? Not yet, because I have "cushion"
But I am watching it like a hawk.
Great point on my CSCO puts....I am really going to look at that AAPL trade. I like it.
Hey Jerry thanks for the compliment. Fishing is much cheaper and fewer headaches. Lol oh and a lot quieter than my girlfriend.
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