Tuesday, June 26, 2012

$FB paper trade update

10aug - last friday i sold the Aug10weekly 23 short calls for .25 when the stock was near $21.50.. those will go out at full profit and reduce the cost basis of the long call LEAPs.. again this model is to show that you have a choice of actions to take instead of just selling the leaps / closing the positions.. why does pete najarian still hold the stock from IPO and its 21ish now ? the intent of buying the LEAPs is you have a long term outlook.. like stephanie link and JCP... so here im trying to lower the cost basis..granted its way underwater. so if you think you have a better trade to deploy the notional capital there is no reason you can not do that too. will look to sell another short call on monday hopefully on green tape.

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28july - stock sure has a been a turd. the weekly short call expiring at full value helps knock down the cost basis of the Leaps, will look at some type of ratio spread soon to start working on making up for the losses.

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26july - earnings today after the close so that means IV for options is huge..weekly ATM is near 230 and pricing in about a $3 move either way.. i dont know which way it will move but for this paper trade model im going to take advantage of the high premiums for earnings , with stock around 27.50, im :
Selling the July27 weekly 30 calls for .70 . if it moves up i will roll the short calls to either the weeky or Aug monthly depending where its at on friday. goal is to start chipping away at the cost basis of the 2014 leaps. still have a ways to go . position in a google docs spreadsheet

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20july - sold the July33calls on 5july for .30..letting those expire at max profit today and will look at selling short calls on monday ideally on an up day with earnings next thursday. now doing the grind of bringing in premium to knock down the cost basis. remember the thesis..that you like Facebook as a long term position. If you are indeed "long term" then look for ways to bring in income while you wait..if your thesis has changed..sell, take your lumps and move on to next one.
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30 jun - stock pulled back since early in the week with the weekly 35short calls expiring at max profit, will resell some upside short calls on first green day. remember the thesis is that you want to hold this position "long term" and bring in some weekly income as stock moves around between now and 2014. its not a day trade.

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26jun - since its now ok to not be overly negative on facebook , ill add a trade into the paper trade model. assuming you have 500shares worth of capital to put to work, or about $15000.

Buy 10 of the Jan2014 20strike calls at $15.70 = $15700debit
Sell 10 of the weekly july29 35 strike calls at .15 = $150 credit

the jan2014 has a delta of about .86 meaning that if stock moves $1 then this leap will move .86cents. With this trade i will use the strategy of trying to bring in weekly income by selling the weekly upside short calls against the Leaps, weekly rolling diagonals.. if it really rallies, no problem, can always sell both legs for profit. this trade in the paper trade model in a google docs spreadsheet


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