Hi all, Well we are deep into earnings season. Today's announcement by NFLX again demonstrates the importance of avoiding trying to out guess an earnings report. The report may be great but not what the street wanted or expected and zap out goes several billion dollars worth of investors money. It is expected that NFLX will drop around 20 dollars tomorrow morning. If so by mid-day it might be time to dip your toe into the water to test the temperature. There might be some decent puts available when the dust settles. But don't rush and don't try to out guess the market.
Today I opened some put spreads with..
SPX weeklys 1295/1300 puts for 1.75% ROI
SPX WEEKLY 1360/1365 CALL FOR 1.7% Roi
GOOG weekly 545/550 call spread 1% ROI
So there are some decent plays out there but i spent several hours digging for ones that I liked. Maybe tomorrow will find some more spreads or regular puts available. Lets see how the mkt does in the AM.
Jerry
49 comments:
Jerry,
Your GOOG spread has only 3.8% cushion? 4 more days to go, isn't that a little tight?
TK
sooo no picks this month yet. i might have to go with a monthly. i will see what aaple or nflx looks like.
Jerry, I looked at the SPX and GOOG but thought they strike was to close, what % cushion do you have on those?
It looks like:
SPX weeklys 1295/1300 = 3.7% Cushion (Put)
SPX WEEKLY 1360/1365 = 2.9% Cushion (Call)
GOOG weekly 545/550 = 3.8% Cushion (Call)
All Spreads.
Hi all Regarding my closer strikes. SPX doesn't move much and I set these up later on Monday so i have around 30 points on each side with 4 days to go. On the GOOG position I have 20 points of cush. Earns are out of the way, so GOOG has to move over 5 points each day to reach 545 in 4 days. For a trade late in the period, on in a weekly position, more than an actual percentage number I am trending towards trying to figure what is a reasonable move for the stock. Such as 20 points in 5 days.
I do have some regular puts that I opened a few days ago with SINA, AAPL. I am ready to close both of those as i get around 1.5-- 2% for the remaining 3+ weeks.
Jerry
I've noticed that even with the big sell off in share price of netflix; the May puts are also getting cheaper. Is this because the vol. is lower in the stock now after earning?
Sold some slv $38 for 5 cents 3 days.
Hi Hannah, I also have some of the SLV.. I like 'em.
Ian, A combo of things will effect the price, the main being the mystery of the earnings report is now in the past. It is always best to avoid the stocks that are reporting (or like kinds) The risk far out-weigh the possible gains. Trying to out-guess the earnings and in general using strike prices to close, are what gives options such a negative bias in the minds of many. For every person that quietly make good money with options, there is one that can't wait to tell the story of his brother-inlaw's best friends cousin that lost everything. Just part of the territory! As I mention in the book, when playing golf with people that should know better, many think I am crazy to do options...lol
Jerry
Opened NFLX call spread 255/260 for 3 trading days.
Let's see how it goes
ROI is > 3 %
Jerry,
Did you close GOOG? I have 545/550 call.
I don't know if I close today or wait to see tomorrow
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Kenny, I am waiting until tomorrow. One advantage of spread is that the maintenance does not change. But the potential loss can still be large. So watch them and close - or roll out.
Tomorrow will be interesting.
When does summer get here....
I am very curious on what Ben will do tomorrow, and what will happen with the markets as well. This is the main reason why I did not play in the sand box with SPX this week. I do think SPX has reached a top and it is time for a pull back, jmo.
Chris
Anyone knows why GOOG keeps going up yesterday and today?
Kenny,
I would like the reason GOOG is going up is due to people buying on the earnings dip.
thanks Gssound... I have GOOG call spread expiring this Friday, a little bit concerned...
SINA is getting hammered this week. Any takes on what to do? I think I'm going to wait until BIDU announces earnings after the bell.
Hi again Jerry. I see u r trading SPX! I sold puts 1165 may 11 on monday @0.60. I think it is a very safe strike for SPX. Anyway I see that often you all talk about "weekly". What do you mean? I am new here and trid to make a search before asking but with no success. I read u book but u write about naked puts and not spreads. Where can I understand more about it? Thanks a lot.
GinTonic,
There is a list of weekly options stocks and ETF's here. They trade like monthly's except they
run Monday-Friday (expiration).
Here is the list of stocks and ETF's that trade weekly:
http://www.cboe.com/micro/weeklys/availableweeklys.aspx
Hope this helps.
Thank u! It sounds something new to me! I'll have a look. Ciao.
Ehmmmm, is it possible to trade weeklys on IB? Tks!
I was just wondering if anyone can tell me where do they go in order to find the day a company is releasing earnings. For instance, is it common for them to change the release date, take a look at FSLR, a few days ago they released saying they would go on april 28th, now they changed it to may 3rd. how do you trade when you do not know the exact date? I use earnings whisper but even that usually has a (not confirmed) status when over a month away.
-Jonathon-
GinT... A slight correction to DR3's comment. Weekly options come on line Thursday and run until the next week Friday.
I had some SPX 1360's with the weeklys. I closed them as I don't like the way it just keeps going up. a small loss but it happens..
Jerry
Jonathon:
I've had the same frustration. I've been using
http://biz.yahoo.com/research/earncal/a/adbe.html
at Yahoo Finance. (Hopefully that link works as I wasn't able to get to the page any other way.) It lets you search by ticker. I've found the dates are more "suggested dates" not the "gospel". If someone else has a better source, I'm all ears.
GinTonic, yes, you can trade weeklys on IB.
Fulgore, I tried emailing you.
Bob
Jonathon,
I use Yahoo Finance, then type in the symbol and click on corporate events on the left hand side. Usually the first line will tell you when the earnings date is and what time (before or after the bell).
Chris
re earnings announcement plans you can go to http://www.earningswhispers.com/stocks.asp?symbol=fcx
Gin Tonic,
Paper trade until you understand what this is all about or you will lose your shirt. There are books, websites and live seminars all over the place.
I find earnings dates 2other ways in addition to what has been said. At Schwab I look up an annual chart and 'show events, if you click on the last earnings it usually shows the next earnings. At trade monster when you pick a put option you can click on an analyze button and it will tell you 'events to watch out for' and if earnings happen before expiration it will highlight it In red.
George
bobj, can you please email again i dont think i got it or i deleted by accident. fulgore1234@hotmail.com
Jerry, I am with you on the SPX for the put but not the CALL lol .. good idea getting out.
Hi for earnings i use http://www.briefing.com/Investor/Index.htm
just enter in the symbol
regards
for earnings, agree with rhm, briefing.com is very good. you can also use finviz.com, which is a great free site with a lot of features.
also, i think many broker platforms can put an e/r date on the charts, i know tos does.
Does a credit spread require less margin/maintenance than a naked PUT? How is this calculated?
The PCLN 485/490 is going for .05 Bid!! (.07Mid)
Its at 550.03 now. 1% for a day AND 60 points of cushion! That's nuts!!
Deck and Rimm are getting hammered. Bull market doesn't look so bullish?? May be it's sectors rotation? Tech is bad, finance is bad, retail doesn't look so great, commodities? - The only reason to remain high is weak dollars...My list looks red hmmmmm
Sold some POT at the end of day - I think the sell off from earnings is over. Was looking at CMG but the illegal immigrant hiring has me spooked.
HI Hornet, Yes, that is a simple answer regarding does a spread require less maintenance.
EX; Doing a spread, If you use a stock that is trading around 500. You do a spread using the strikes of 450/455 The different option prices are 450 = .10 the 455 = .50 The maintenance is 5.10 per option or 510 per contract.
If you used a plain 455 strike with a naked put the maintenance would be approximately 55.50 per option or 5550 for contract. So the difference for using a spread is about 10% of a naked put in this case.
If you were using a stock that traded around 80 and for a naked put used the 65 strike that paid .50 the maintenance would be about 700.
But doing a spread using the 60/65 strike the maintenance would be 510. So again less.
Also another advantage is that if the stock drops some with a naked put the maintenance will continue to go up. With a spread the maintenance is always the difference between the strikes. Spreads are not the end-all but just a different tool to use.
Jerry
hi jerry
how u avoid rimm scenario when they come up with unexpected guidance report.They just had their earnings last month.I am wondering if theres any site which does tell about such press conferences.Has this thing ever happened to u where they announce earnings before their earnings date
thanks
Hey doc - one of Jerry's rules is to use "best of breed". RIMM is not that IMHO - AAPL and GOOG smart phones are beating the Blackberry to a pulp. I did look at RIMM last week after finally plateauing but resisted the urge by reminding myself that the iPhone and the Android phones are killing RIMM.
Jerry, are you still holding GOOG expiring today?
It's so close now... I'm still holding it.
Trying to open some GOOG for the weekly - 520 / 515 spread. It just won't go through lol.
22pts (4.2%) of cushion for a week
Chart is uptrending
No earnings in site
2% return before commission - 1.2% after - man that commissions rocks me with the spreads.
Hi all, Dr, as Newport said. I have been negative on RIMM for while for the reasons stated. These announcements happen and another reason for the more cushion the better.
Kenny, No I closed all GOOG yesterday.
Looking forward to this week ending and us getting into next weeks positions. I have a bunch of positions that should expire today so while i am golfing i am leaving you guys in charge!! Don't mess up or you all are fired...
Jerry
Newport, I can never find good trade with POT ever since they split. What strike did you use?
Thanks.
Question about closing out a position early.
Is that money readily available for use to buy another as soon as the position is closed?
Thanks!
Hi Hannah - volatility is so low that I have been doing a few "cash secured puts"; looking for over sold stocks per the RSI14 and fast stochastic. Yesterday, I was able to get the 52.50 for .19 expiring next week. 1.64% ROI on 5.25% cushion. Not the best setup but so far so good. I may close this out at day's end if I can BTC at .09; .8% return for 1 day I can 'like' that.
Newport-that's awesome for one day. I seem to like your trades (as far as I remember..lol)
I have let the IRA account be idle a lot. I think I did it wrong, I should have moved IRA account to TradeKing.
DR3z - I believe the answer is yes. Moving your money into some other more profitable options -that's why you close the trade and get the most out of your money? Otherwise just let the options expire worthless, right?
Good weekend folks!
Didn't close my POT (.09 wouldn't trigger). Guess I have something to look foward to on Monday - y'all have a good weekend.
@Hannah,
Yup, that's what im thinking (get the most out of your trade).
All,
Concerning weeklies, when do you start looking at potential trades? Sunday?
Thanks!!
I usually start looking at the new weeklies on Thursday or Friday to see the strike prices available. Monday or Tuesday I will pull the trigger on them. I was just looking at the new weeklies and I am really not liking the strike prices available on the popular symbols.
I was really thinking of opening a couple May expiration spreads on PCLN, with at least a 100 point cushion either way. There is some really good premium still in these strike prices.
What are you guys looking at and thinking for next weeks, weeklies, and for the rest of the month?
Chris
Just a note, PCLN is expected to announce earnings on May 5th. And a question, do you guys use limit orders when opening a position? And for credit limit orders, does it mean the minimum you're willing to receive? Thanks.
The NFLX 205/210 looks interesting to me:
Its got a 22 point (9.7%) cushion for the week (no earnings).
From the looks of it you can get anywhere from .06 to .09 depending on how it gets filled.
This is the only one I like......right now.
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