5/31/2012 Fast Money Web Extra $GRPN

desk talks GRPN and the lockup expiring in tonights web extra.. good conversation tonight. i dont follow the stock but here is tonights video

my thesis to enter Diagonals $AAPL

here is what i use for a thought process to enter diagonals.. essentially the same reasons you would buy 100 shares for a long term hold. remember Lenny Dykstra..his strategy of buying a DITM call a few months out with a high delta and selling after getting a one point up move? im probably in the minority, but i like that thought process..except the sell after a dollar move part. You take long position for a lot less capital and give yourself plenty of time to have it work for you. Modifying this a bit to what i do:

1. I go as far out as practical vs what im willing so spend..so now i would only be entering into 2014 Leaps...2015Leaps come on the boards in september i think..i want the maximum amout of time for the leaps to work for me...its not a short term Doc J style fast trade
2. Related to #1 is that my thesis is the stock will make a grind higher over the course of the 1-2years of holding the Leap...in other words im assuming that stock will work its way higher..for me this strategy is not for those sideways moving stocks that are at 45 in january and 48 in december with a yearly high of 50 and low of 40. thats just me.
3. My goal because i expect upward movment of stock(Leap) is that i want short call to expire at max profit..therefore i will sell calls out of the money. goal is to capture that monthly premium.
4. related to #3 is because i am holding the leap for duration i dont need to sell in the money short calls for more "protection". i would prefer not to have to roll an ITM short call up to another ITM short call the next month. thats just me..so ignoring upcoming earnings..if i had a DITM Leap on AAPL i would look at selling a July 600 or 605 short call for $17+ vs selling at july 570 for $31.. sure the 570call gives me more downside protection..but again, my thesis is upside, im entering / holding the leap because i expect an up move..im entering for an up move im not entering to try to lose less money from the get go. if that was the case id stay in cash if my thesis was bearish... if it pins at 605, like i said id rather not have to roll an ITM call to ANOTHER ITM call the next month.. i want all time value...thats just me.

$FB - are you picking at bottom? then add this...

if you are picking a bottom here or using the thesis that you will buy today for the "long term"... with stock at 27 today, look at adding this for double upside:

Buy a July 28/31 call ratio spread... (buy one 28, sell two 31's per 100shares) ..can put this on for zero right now, ie "free trade")

This ratio spread profits from 28-34 at july opex with max gain at a 31 pin. so at 34 the ratio is zero but your stock has gained from todays 27 to that 34. no added buying power is needed for this ratio spread. again, put this on if you have a bullish thesis going to at least july opex, you can also put this on if you have a paper loss from the IPO..you put this on for free and if it rebounds you can start chopping away at the cost basis of your shares.

5/30 Fast Money web extra - $AAPL , David Einhorn

desk talks about david einhorn and $AAPL. well more accurately Melissa reads a few comments about what einhorn said , Karen chimes in a bit, and as usual Guy adds nothing to the web extra and acts the clown. here is the clip web extra clip

Something to consider if you have $AAPL short calls

heres your situation, you have either a covered call position or diagonal spread position on AAPL and are unsure of when to roll that short call to the next month. i really dont like bloggers that feel they have to talk in "option greeks" to make themselves feel smart, so ill keep it to a minimum. Assume you have the following:

Short the June 600 call at $6.00

you are looking to roll it to the July 600short call at $18.00

so at first glance you see that by rolling today you gain a credit of $12 ($1200) per contract.  things to consider with 17days left to june opex..

Notice the time decay of each option (the theta column):

June600 is -.36 and the July600is -.25 .. meaning june is decaying .36cents a day vs .25cents a day for July..no shit right, front month decays faster..but that means that by holding off on rolling that difference works 11cents in your favor each day..so all other things being equal, the call you could roll today for $12 will be able to be rolled tomorrow for $12.11 .. so 11cents in your favor, this number will increase in your favor as decay speeds up on front month.

The other major factor in that pricing is the IV movement, as you know going into an event, earnings usually, the IV increases..so despite time decay working the option will likely increase in value the closer to the earnings date you go..in this case the unconfirmed earnings date of 17july for AAPL.. so IV will slowly start creeping up the closer you get to that date...that increase will start to offset that time decay..so you have 2 things working for you to keep the price of the july call higher the longer you wait.

These are just 2 things to consider when making your decision on whether to roll that short call now or wait.. it is not the be all end all .

Example of Rolling up a Winning LEAP for $AAPL

since i got asked a few questions about it ill expand the explanation.. the scenario is that you made a successful entry with LEAPS in the past had a good gain and now are wondering what to do. for example say you bought Jan2013 350strike LEAPS last year and now have a good gain. Rolling that jan2013 out to jan2014 350strike would cost you money. as of this moment:

Jan2013 350call is at $227 ($22700)
Jan2014 350call is at $243 ($24300)  

so to roll it out one year would cost you $1600 per contract..$4800 for three.. not too appealing. assume you have three contracts.. if you are comfortable with 3 contracts, look at the strikes for 2014 for the level that closly matches the price of the jan2013 contract..

Jan2014 370call is at $227 same as the Jan2013 350call...you can now roll your jan2013 350calls to jan2014 370calls for zero cost...you gained another year on your LEAPs for free... now continue with your original thesis..whether that is long only or selling monthly short calls for income, example:

Now you own 3 of the Jan2014 370calls
and you can sell 3 of the July600 short calls for $1500 each for $4500credit

Option2 is rolling up to higher strike but do so with a strike level that nets you more contracts, such as the Jan2014 450call.... 3jan2013 calls pretty closely equals 4 jan2014 450calls..give or take a bit based on the bid/asks.... so now you have 4 LEAPS you can sell monthly short calls agains..for example

now you own 4 of the Jan2014 450calls
and you can sell 4 of the July600 short calls for $1500 each for $6000 credit

see that...you can take in $6000 credit vs $4500 credit on previous example.. all for not committing any more credit, no more buying power needed..and all you did was gain another 12months on your LEAPs..giving you 12more months to do these monthly credit sales.. that $6000 a month will quickly add up to a juicy return at years end.

5/29 Fast Money web extra $USG $LPX $EAT $WFC

desk talks Case - shiller numbers and works in USG LPX EAT and WFC into the conversation... dont really get the EAT reference but here is the video clip web extra

the picture doesnt have anything to do with anything..just some classic arnold laying it down with a vulture

$CMG -good trigger but no trade

decent trigger today for a new entry that got me looking for a credit put spread trade..broke out of this downtrend today. so looking at credit put spreads at/below the low from last week as a minium so near 380ish.. but looking that the premiums available and the wide (as usual) bid asks i did not get the warm fuzzy about this level for June.. unconfirmed earnings in july show to be before opex so that rules out an july spread since that will result in IV rise into the earnings date likely cancelling out any time decay. so no trade for credit put spreads at least.

Next $AAPL entry point

the next entry point for AAPL is a break of the near term highs near 576ish... best levels for credit put spreads are still going to be at/below the 520ish support double bottom level..premium at those levels for June starting to get unattractive though

$ZNGA "fix my trade" segment from OptionsAction

Options Action desk talks about viewer Ashley's ZNGA trade that they need to fix.. kind of corny in my opinion. they could have easily revisited one of the dozen or so trades that they have recommend previously on the show but never mention again and make a trade adjustment, "contant trade updates" they advertise.
So this mythical "Ashley" Sold the July 9 put (cash secured put).. Ashley happened to be available for alot of filming i noticed so she can be included into the lead in setup. melissa shows chart where if she bought shares here paper lose would be $250 vs the $175 paper loss on the put. Just dont like that smirking condescending "we always have good trades tone" they had..laughing it up and the end.. thats one reason i started tracking their trades to show they suck ass as much as the rest of us. here is the video clip znga clip , then there is mikes helpful "you gotta be nimble" type comment, totally not mentioning his own ZNGA trade he had on-air... Mike's On-Air Trades

If you sell a put you have to have the cash set aside to buy the stock if you have to at opex. but most people seem to change their tone when the stock actually drops that much. ashley should consider her tax situation before taking scotts advice of closing out... she could take the loss now (never know, maybe she sold a 20lot, so it could be significant amount)..so take a loss now, will there be a wash sale, can that loss be used to offset gains...OR if not, then get put that stock at 8 in July.. never know could rebound too.. if you get put the stock then your cost basis is 8. Sell covered calls every month to bring the cost basis down..depends on what your thesis is with the stock...likely move in sympathy with Facebook going forward...so just smuggly saying to close it out and take the loss is misguided.

$RMBS chart and setup

been looking for a break of this downtrend.. moving sideways does not qualify for that.. need to put together some positive days. would get interesting on move back above 4.80ish level.. no touch till then

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$BRY chart and setup

still going to be a no touch for a bit, sideways action this past week, but still holding in the general downtrend, would not make new long entry until at least breaking thru the top of this channel. no bottom picking. set your alert instead

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5/26 $DNDN chart and setup

going to be the same as last week, would wait for a break thru the old support become resistence level, also corresponding to a gap fill.. give up that first 1-2 dollar move and wait.. no bottom picking here.


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5/25 Options Action Web extra $TIF

on tonights web extra scott answers view mail about how to possibly repair selling a put on tiffany. here is the video web extra , because view mail does not say at what price he sold his short puts im not going to comment on scotts suggestion.. but scott makes some good points in this clip, pay particular attention to the end where i says jake should have gone with a closer dated put.

5/24 Fast Money Web Extra $XLE $UNG

on tonights web extra Joe talks a little bit about oil, brian a bit about natural gas.. have no positions in either, here is the video clip  web extra

update to the $CF - PaperTrade Portfolio

17july - this month will be a good example of "not a bad problem to have"... since selling the july175 short call the stock has really taken off on the corn crop news with it near 207 now.. so at first glance you would think that the short call lost money since its way in the money.. in isolation that is accurate but the LEAP is gaining in value at same time so you are really just capping your profits.. so with 2days to go before july opex  im buying back the july 175 call and rolling it into the Aug175 short call for about $100 credit..is not much but with diagonals i really dont like rolling short calls up and out for a debit..especially when they are ITM like this.. my thesis for next month is bearish, that the stock has run too fast.. if after another month i am only able to roll to the 175 strike again i will instead close out the LEAP as well and take the profits from this "position" and walk away vs rolling month to month just for that $100 credit.. better to deploy this notional capital elsewhere then sit on it for $100 a month..as of today this "position" is up $800ish. this position in a google docs spreadsheet

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15 jun - another almost perfect pin for this trade, with 10min to go i closed the June160/165 ratio spread at $4.35. remember it cost zero to enter and got $435 profit out of it... i said below its double upside to 165. thats what we got.. this ratio spread profits and also the underlying LEAP profited. so to summarize what i did for June..sold a short call, took profits on it when there was only 87cents left, moved into a ratio spread for free to set up for an upside rebound into opex. as you can see the profit on the ratio far exceeded the remaining 87cents of premium i left on the table from the short call. so closing that out and entering another trade worked out this month, the near perfect pin was just gravy. now subtract the profit from the ratio from the cost basis of the Leap. here is this trade in the google docs spreadsheet . so even with the stock being down from when i entered the LEAP, the "position" is profitable by $500+. after taking profit in ratio, i also did the following for July:

Sold the July 175 short call at $4.05

"position" is now back to a diagonal spread

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4jun-   in the Paper Trade Portfolio , i am buying back the short jun 175 call and adding a call ratio spread for remainder of June opex... all three legs could be done for zero cost when i priced this out earlier

Buy to close - June 175 call
Buy to open - June 160 call
Sell to open - June 165 calls x 2

now have a DITM leap and a ratio spread, sets up for a rebound for rest of opex. also since there is only .87 left in the jun175 call.. the ratio profits from 160-170, giving you double upside potential to 165. above 170 at opex will just roll the ratio to a short call for credit. you are selling two of the 165calls , one of which is offset by the Leap..so its not a naked short call...broker considers it a Diagonal spread and a regular call spread. in spreadsheet you can see the profit from the short call helps lower the cost basis of your 2014Leap.


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24may - stock has show strength last few days , climbing back above the 200day today. so for the PaperTrade Portfolio will add the following trades:

Buy the Jan2014 140strike call for $51.45 ($5145)
Sell the June2012 175strike call for $4.30 ($430)

this is a diagonal spread. dont need to be concerned with the day to day movement of the stock since the long call option is for 2014..alot is going to happen in 2years.

$AAPL - Investor Business Daily video analysis

IBD finally came back around to cover AAPL in its sometimes daily video analysis series. not as good as usual, alot of captain obvious stuff today but here is the video link video clip


my take is that it broke the downtrend a few days ago, i entered credit put spreads at the 520 level. would keep any new spreads below that line as well..the low from last week gives you a double bottom with march low to shoot against.

update to the $FFIV PaperTrade Portfolio

27 july - with stock near 97, i sold the Aug105 short call for $140.. chump change, but ratio spreads are not pricing good now that earnings are over. start working on getting some income now.

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20 july - stock been acting poorly since entering this, again no rebound in time to make the ratio spread profitable at opex time so the july 110/110 expired worthless from a .95 entry.. just holding the the long 2014 Leap right now. position down about $1800 . trade in a google docs spreadsheet

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15 Jun - didnt get the rebound was looking for so the June ratio spread portion will expire worthless, so for the July opex i closed this worthless jun ratio and put on a July ratio..

Buy the July100/110 call ratio spread for .95 (buy one 100, sell two 110's)

going to pay .95cents to put this on. as you have probably noticed the earlier you put on ratio spreads the wider you can go on strikes and/or the cheaper it is. again, with just this ratio, the profit range is about from 100-120..no problem if it goes above 120 since earnings are before opex last time i looked, since the underlying LEAP will be gaining in value from where it closed today. after one month this "position" is down about $800. plenty of time till jan2014. no need to sweat the day to day moves. google docs spreadsheet

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31 May - stock down some since entering the LEAP..not a big deal. will see lots of ups and downs till 2014... today will add a Jun ratio spread to position for upside move till june opex.

Buy the June 105/110 ratio spread(buy one 105/sell two 110's).. can be put on for credit but will enter zero into spreadsheet to keep it simple

no added buying power needed. just the ratio profits from 105-115.

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24 may - stock has made a huge down move since earnings high near 138ish, today with sympathy move with NTAP guidance...finally has made the gap fill ive been posting and also today tagging the 200day. for the PaperTrade Portfolio i will initiate a long position assuming that stock will rebound from this general area.

Buy the Jan2014 75strike call for about $47 ($4700)

i will look to add a short front month call when stock rebounds to make position into a diagonal spread. This is a 2014 call option, so you do not need to fret over the day to day moves of the stock, could go down from here but you have almost 2 years to keep selling short calls, doing ratio spreads, collars, etc every month. With this 2014 call you control 100shares for $4700 vs buying 100shares at $10800.

Did you lose money with @TraderFlorida today? $AAPL

heres what @traderflorida did and heres what you did today with AAPL based on the tweets/videos i saw:

1. TF mentioned he was short in 560's
2. TF mentions he is adding to shorts at 555ish
3. You see that tweet and since you have limited buying power you bought some puts
4. stock goes above 565
5. you and dozens of others tweet TF asking if he covered.
6. TF doesnt tweet exits despite having time to make videos, answer every tweet / question directed at him from 14000 followers
7. TF makes video and tweets "never let winning trade turn into a loser" , forgest to mention the block from 555, doesnt have time to mention what price he covered at either,  makes another video, adds Ha, Ha, Ha to video and says will reshort in low 570's
8. You actually were fortunate enough to catch that video before market close because someone retweeted it.(you didnt see it directly because he blocked you for asking if he covered)
9. You now sell your puts at a loss since stock is 12points higher from his "added to shorts at 555" tweet
10. You caught the video really late right before close about how TF is short again in low 570's and you go ahead and rebuy some puts.
11. TF makes ANOTHER video after hours and says he covered after hours..says covered, not took a loss of course, and thinks stock will go higher
12. You see that video and go "FUCK!!!", because you just rebought those puts and now market is closed
13. TF tweets he made money
14. You tweet you lost money


so is that about how is happened for you today. do you feel dirty? remember what B'Rabbit said in 8mile..."no such thing as halfway crooks" ... no such thing as half transparency . those that have been on twitter for a while can cite example after example of scenario's like this..NFLX comes to mind.. recommendation..use his charts as another tool in your toolbox, dont hang on every word

5/23 Fast Money web extra $FB $LNKD $AA

desk answers 2 tweets. tim talks alcoa and dan talks LNKD . not interested in either so here is the video clip:  web extra

CLOSING the $GLD trade

15jun - this credit spread will be expiring today at max profit. not a big position but a winner is a winner.

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23 may- been in and out of GLD months ago..won some lost some..giving it another shot today. hard to see since had to zoom way out on chart..testing the support near 148 earlier today..went with strikes below the next support line at 144ish..already a good gain since putting it on.doesnt mean it cant reverse again tomorrow

Sell the June 142/139 credit put spreads at .30 credit

Expiring $FFIV credit put spreads for $420

15jun - in hindsight, this was not a good entry , blew right thru the 200day and got near the short strike which would have been a gap fill (red line)..time decay kicked in to let this expire for max profit. Jun90/95 credit spread x10 =$420

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24 MAY - per the setup below i entered into FFIV credit put spreads yesterday, could have got better prices by waiting a bit:

Sell the Jun 90/95 credit put spreads at .42 credit

filled the gap and tagged the 200day, strikes right below some support near 97ish, probability of max profit at 85% at time of entry according to Trademonster analyse tab.

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23may - had an outside bullish reversal on monday that did not work out and is solidly into the gap from earnings prior..setting alert for under 110 to get the full gap fill..that level lines up with the 200day...holds there will price out some credit put spreads near the 95/100level or lower. glad i rolled those short calls within my diagonal spreads to the 115 instead of up to 120..little bit more protection.

here is a video by dan fitzpatrick from monday about that outside reversal..Note: you can sign up for a free daily video at his site, no CC needed, -->> FFIV video

$600 profit on expiring $MA credit put spreads

15jun - pretty happy about this trade, although it came close to the short strike, the support line held so my strike selection was a good one. credit spreads expiring at max profit. June 380/385's x10

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22may - here is a video clip from fast money tonight with fund manager talking about mastercard being his top pick. nothing directly related to my entry but good enough place to put this clip -->> mastercard clip

22may - mastercard breaking this downtrend today after a strong day yesterday. entered new credit put spreads:

Sold the Jun380/385 credit put spreads at .60

trademonster analyse tab show this trade to be 84% probability of max profit at time of entry

follow me on twitter @mark_lexus for more free charts/trades/setups

5/21/2012 Fast Money Web extra $LOW $HD $USG $TOL

desk talks a few stocks, except Adami as usual acting the clown.. BK talks home depot and lowes, grasso talking toll brothers. here is the video clip web extra

CLOSING the June $AAPL credit put spreads

15jun - this credit spread will be expiring at max profit today, that 520ish support level held for rest of month. initial entry was 10lot, added 5more next day. for $825win

click -->https://twitter.com/Mark_Lexus to follow on twitter

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23 may -  added to this position today:

Sold the Jun515/520 credit put spreads at .75

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22may -  got a bit of a follow thru day today that i was looking for as of the time of this trade. doesnt mean it cant reverse and go back down of course. so today entered into:

Sold the Jun 515/520 credit put spreads at .55

Trademonster analyse tab shows this to be 88% probability of max profit.

follow me on twitter @mark_lexus for more free trades/setups/charts

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21 may - breaking the fat crayon downtrend today. if you are highly disciplined, wait for a followup day tomorrow before entering long via credit put spreads. but still keep spreads at/below the 515ish level

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19 may -still making lower lows lower highs. looks like its headed to test that low from march near 515. would hold off on new entries till this trend changes. once the trend changes you will have a good level to shoot against for any new credit put spreads.

follow me on twitter @mark_lexus for more free charts, trades and setups

$BRY weekly chart and setup

still in that downtrend since march, would need a good reversal not just a one day move to reenter, minimum break of the top of this channel, no hurry to get in, avoid for now. not too complicated


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$ELN weekly chart and setup

26may - got that breakout of the downtrend that we were looking for from last week.. huge volume too, also broke above the 50day which is also positive, your next buy point to add is a break thru the recent high near 15.. if you got in on the breakout, raise your stop at least to above your breakeven to lock in the gain. would like to see a follow thru day on tuesday

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still no entry since last week. would wait for a break out of this downtrending channel, which will coincide with the 50 day, would need above average volume also before entering

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$RMBS weekly chart and setup

damn, does this ever get any better, can almost cut and paste my comments every week on this one... has to break this downtrend before initiating any long position..would really want some continued strength , not just a one day pop. avoid for now

follow me on twitter @mark_lexus for more free charts, setups and trades

$DNDN weekly chart and setup

still no entry from last weeks setup. would keep avoiding for now until climbing back over this level that was previous support..re evaluate then. no need to pick bottoms


follow me on twitter @mark_lexus for more free charts, setups and trades

Fast Money Web Extra 5-17 $TBT $TLT

not very interested in bond yields myself and i dont mess with the TBT or TLT but here is the video for the web extra for tonight webextra

Segment from Fast Money on $FB $AAPL

cant get enough of the Facebook buzz... here is the video from last nights Fast money show covering Facebook and Apple in case you missed the show
-->>. facebook video

5/16 - Fast Money Web Extra $AAPL $KSS

5/16 - desk answers a few viewer tweets.. Dan talks AAPL and Murphy talks KSS , here is the video clip tonights clip

AAPL chart for reference:

$AAPL chart for 5/16

the level everyone has been watching for was breached yesterday, that being the 555 level. yes it went to 550 today and if it rebounds right now..weeks from now everyone will look back and say that the 555 support level held. which would be accurate since levels are not brick walls..there is some give to them..if you are going to take a shot here for a bounce with new credit put spreads, then keep new ones for June at/below the lower support line near 515... if you are going to condor the position right now or just sell credit call spreads expecting a continued selloff then keep at / above the 50day moving average.

5/15 Fast Money web extra $AVP

web extra tonight covers Avon.. dont know anything about it so not much interest from me.. here is the video  video clip

the $AAPL put spread collar explained

now that i have collared my AAPL leaps it guarantees that the stock will rebound higher so you can all thank me. To go with some 2014 DITM Leaps:

Sold the June 585 calls
bought the June 560/535 put spreads for zero cost.

Since i will be holding the Leaps long term im trading around the position with either short calls for monthly income, ratio spreads to get a double upside, or collars for protection

what i do different than some collar trades you see on optionsaction is that i pick strikes where i start to profit (from the puts) right away, instead of lets say a Jun 545/495 spread..where i would need a pullback to 545 to start profiting..granted it costs the same and can make more...if stock drops 15points from here at opex i want my spread to actually give me some protection. also i still benefit from a $25 up move to $585

so the chart shows the profit box for just this collar. if stock moves up to 585 (the short call strike), the collar is a wash but the Leaps gain. i profit on the collar from 560 down to 535..max profit at 535 or lower.

if stock moves above 585 at opex, i will roll that short call to July, strike TBD. will see where we stand near June opex and put on a trade for July at that point.

5/14/2012 Fast Money Web Extra $HD $USG

Brian and guy talk about USG and Home Depot on web extra tonight, here is the video web extra video . given the two i would go with home depot, USG seems more tied to new construction than home upgrades since you dont need alot of new sheetrock if your contractor knows what hes doing..and likely contractor will get that sheetrock from Home depot or Lowes anyway.

$GOOG chart and setups for new entry

16may - textbook trigger for me to enter a new credit put spread per the setup below..im going to hold off for the only reason is that i dont knowenough about that upcoming stock split and when its happening.

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14may-first off, i would not hold options on GOOG into the upcoming stock split whenever that is.too confusing, now.. stock has been in a channel for few weeks now..top of channel matches up pretty close with the 50 day, bottom of channel with 200 day...setup are that if it breaks out of top of channel near 620ish then look at new credit put spreads at/below the 200day... other one is if it drops back a bit to test and hold the 200day, then look at new credit put spreads at/below the 565 support line that goes way back. no mans land for me till then.

Options Action Web extra $TJX

scott answers a viewer email on what to do with a put purchase trade on TJX, no new original trade so ill just post the video, good info on how to reduce the paper loss of a put purchase.. tonights video --->>> video

expiring $PCLN credit put spreads for $595 profit

15 jun - another credit spread i had to wait almost to opex to see a profit..tests your nerve sometimes..especially when it dropped to near 600. actually an impressive month if you look closely...dropped about 80 points from my entry area, then rebounded 60points off the low for the month..crazy... expired today at max profit

June 615/620 credit put spreads x 7 =$595

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9may - entered per this setup on 9may, could have got better price today on JPM hubbub but i never expect to get the bottom.

Sell the Jun 615/620 credit put spread at .85 credit

82%probability of max profit at time of entry

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seems to be holding the mid 680's today after getting whipped around right after earnings. tagging this low at 680ish from few weeks ago.. now be looking at new credit put spreads using the top of the gap from previous earnings as level to shoot against...so any spreads at/below the 620/625 fat crayon level..Trademonster shows the jun615/620 spread has 82%probability of max profit.

update to the $PCLN Paper trade model

10 aug - as we all saw PCLN got crushed after earnings. the weekly 670 short call i closed at  5 cents. so that profit on the short call took a big chunk out of the cost basis, will look to sell some weekly or monthly short calls on an up day..long time to go till Jan2014 when the Leap expires. trade in a google docs spreadsheet

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3 aug - perfect scenario would have been to close under 655 at opex and then i would have looked at either at short call or a put spread collar on the day of earnings.. was looking good on thursday but Priceline has been having up 30 down 30 days for a last week or so.. so with stock at 669 i rolled the short 655 call to the weekly 670 short call for a credit of near $1100.. taking advantage of the high IV for upcoming earnings.. so i gain $15 in strike levels and take in $1100 in cash.. wanted to do something to at least bring in $1000 in cash regardless of what strike i went with.. add the "loss" on the 655 short call back into the cost basis.. will review after the earnings move.. i would guess up move

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25 july - stock had a down 35 day, so the weekly 685 short call i had, i bought back near close at .30 for a $570 notional profit on that..subtracting that from the cost basis of the 2014 leap.. as you can see in the spreadsheet.. have knocked down the cost basis by almost 50bucks so far doing the short calls and ratios..still a long way to go till 2014.. next weeks options come on the board tomorrow..will likely look at a call ratio spread of some kind to set up for a rebound.

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20july - the ratio spread worked out well for the remainder of july opex..the july 645/665 ratio was put on for a credit was closed for about $1000 near end of day on opex day.. also as tweeted sold the weekly 685 short call for $6.00 .. take the $1000 from the ratio spread and subtract it from the cost basis of the leap. PCLN position now profitable by about $1000 .. trade in a google docs spreadsheet
Position is now back to a diagonal spread:
Long the Jan2014 600 call
Short the july27 685 call

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30 jun - position is up about $800 since inception now..the ratio spread from this week is dead on after getting that +$21 day on friday..pin on 665 at opex is near $2000 profit on just the ratio..just have to hold it now till then..the 665short calls need to decay to realize that profit. so in wait mode now till opex.

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28jun - on 27th, i bought back the short call for .40 . today PCLN down 13ish, so going to go with a ratio call spread to set up for a rebound for the rest of opex vs trying to scalp weekly premium. the ratio was going for a credit but will enter as zero in spreadsheet to keep math easy.
Buy the July 645 / 665 call ratio spread for credit (buy one 645/sell two 665's)
still holding the underlying LEAP. Ratio spread profits from 645-685 range.. max profit at 665pin at opex.

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22 jun - stock rebounding about $5 this morning, so will enter another short call to go with the existing LEAPwith stock near 662 now, heres the trade in google docs spreadsheet

Sell to open the Jun29 675 weekly short call at $4.10

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21 jun- on todays dip made the following change to the PCLN paper trade position, had the Jun22 weekly 675short call at $6.10, bought that back today for .55 for a profit of $555 on the short call. subtract that profit from the cost basis of the LEAP. That has offset the drop in the stock price and the "position" is still profitable by $300+. holding off on new short call or ratio for the moment. the PCLN trade in google Docs Paper trade Portfolio


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15Jun - read the trade from the bottom. wow is all i can say.. turned chickenshit into chicken salad by tactically adjusting these ratio spreads, made a little along the way doing it, and was fortunate with the strike selections. got almost a near perfect pine. so with 10min to go, i closed the Jun640/660 1x2 call ratio spread for $18.25..thats crazy..entered for zero, out for $1825. now subtracting this from the cost basis of the LEAP and doing the math.. this "PCLN position" is profitable by $300+ for the month eventhough the stock is down $25 points from where the LEAP was entered..not bad eh. almost a perfect use of ratio spreads to capture some gains on an upswing. after closing the ratio spread i also:

Sold the June22 weekly 675 call for $6.10 = $610

This trade in a Google Docs Spreadsheet
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31 may- going to roll down the ratio spread again, so will close the 675/700, bid/ask shows -1.30/-.70 credit.. so will give myself a .80credit to close. will now roll down to the Jun 640/660 call ratio spread (buy one 640, sell two 660's)..bid/ask shows
 -1.60 / -.10 credit so i could put this on for a small credit, but will enter zero on spreadsheet to keep it simple.  see what im doing there.. im adjusting these ratio spreads based on what the stock is doing, you dont have to put one on and just watch it decay far out of the money..you can still adjust, because you put it on for no cost you will likely be able to close it for no cost or slight credit..getting some profits to adjust down is just some gravy. this trade in a google docs spreadsheet

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23may - with Priceline near 660, im going to close the jun700/735 ratio spread and move it down. bid ask on the ratio shows -3.30/-2.00 so ill give myself -2.25 credit..yep..put this ratio on at zero cost and can now close it out for $225 credit, happens sometimes based on the way the strikes decay in value. now will add the following:

Buy the June 675/700 call ratio spread (buy670 / sell two 700's) - can do it for small credit but will enter zero on spreadsheet to keep math easy.

Again, this ratio spread gives you double upside (with your Leap) up to 700, and just this ratio profits from 675-725.

Paper trade portfolio in Google docs spreadsheet -->> spreadsheet

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10 may - going to add a Priceline trade to the paper trade portfolio, since most of us dont have a spare $70k floating around our seat cushions for 100 shares of the stock.

i have several post-it notes on my monitor..one of them is "wait for a big down day before buying a LEAP" ..so we have that on priceline from earnings which i thought were good..guidance.."under promise over deliver" is the way i look at it.

Ratio spreads (aka back spreads, trade repairs, CPR) are often recommend if you are long a stock or have taken a paper loss with the presumption that stock will rebound and you make additional profits with the ratio portion..further bringing down a cost base or making up for any previous losses. all true. but who says you cant put that trade on when you go long INTITIALLY.. you dont have to wait for a loss to happen first. so using some quotes from today:

Buy the Jan2014 600 strike call for $183 ($18300)
Buy the Jun2012 700 call and sell 2 Jun2012 735 calls for zero cost.

adding this june ratio spread requires no additional margin or buying power, your broker breaks it down into a Jan2014 / jun2012 diagonal spread and an additional June 700/735 call spread.

The ratio spread portion of this 3leg entry profits anywhere from 700-770 at june opex with max profit of $3500 at 735 pin..thats $3500 profit where you paid zero to enter the ratio. with stock at 685ish today, a 735pin is 50points higher.. doing some quick rough math..the jan2014 call has a .70 delta, meaning for every $1 move in stock this option moves .70..so .70 times the $50 up move to the 735 pin gets you $35, ie the 2014 call profits by about $3500 if stock pins at 735, add the ratio profit and you get $7000 profit.. you can do the math for any other pin price..use your brokers profit calculator tool..Trademonster its the analyse tab.

after June opex you can do it again for July, either another Ratio spread, or selling a short upside call. since you own a jan2014 Leap you have 2 years to do strategies like this that would usually need 100shares of stock to participate with. will add this trade into the paper trade spreadsheet and adjust month to month along with the previously posted AAPL trade --->>> google docs spreadsheet

Fast Money Web Extra $BRK 5/9/2012

sorry folks, find this very uninteresting...anything with BRK, warren buffett, or the SALT conference, here is the video though web extra

$PCLN watching this level on selloff

if some crazy selloff happens it might present an entry for credit put spreads..have to see how much it moves though.. gets down to the 620-625 level then might have entry for june..will be much commentary on whats going on in europe im sure.

$AMZN chart and comments - update

29may - grinding its way lower towards a gap fill.. no touch for me till that happens

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9may -no interest in new credit put spreads with that huge earnings gap all up in my face...would need pullback to at least the 200day to get interested.. if you are looking to play that gap fill, the June 225/200 put spread was going for about $7.00 when i last looked..setting alert for 205 to get on radar