13Dec - another small win on this one. stock was down 3-4 in the morning so went out farther to gain some premium since the IV from yesterdays earnings selloff had already fallen, still targeting 25ish or lower delta. stock started to comeback after lunch so went ahead and entered a limit order to close in case I was away from computer. filled for a gain, 31% of max profit.
Sold the Jan20 210put at $3.60, IV was 30ish, delta 26
Bought back at $2.50 for $1.10 gain
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12 Dec - stock dropped $10+ from earnings yesterday. was around 219-222 when I was looking at it this morning. the call fly from below will go out worthless but only risked .35, the earnings seemed decent so on the big down move the put premiums get juiced so I went out a few weeks in order to get decent premium and a couple weeks in time if needed. my eye goes to the 20delta area for starters always. definitely wanted to have the strike below the 50 day.
Sold the Jan10 202.50 put at $2.05 . delta as time of sale was 16, stock at 220ish
stock was sideways and up a couple bucks near the end of day so the IV comes down a bit as well. was showing a 50% of max profit gain so closed the trade.
Bought back the put at $1.00
again my new profit targets are 25-50% of max profit vs holding to try to get 75% + or to opex and tying up the buying power. can do more of the "small" wins in the same time frame as holding to opex. not a large dollar winner. usually do between 1-5 lots depending on the buying power so the small wins can start to add up.(and the winning put sale makes up for the loss on the call fly). if continued down move will look to resell a put.
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screwed this up already, posted on twitter yesterday:
going to price out a call butterfly on $LULU on wednesday prior to earnings. at 230ish now the expected upside move is 19ish so 250 like mike says, im thinking the 245/250/255 call fly using weeklies. i want to risk even less than mikes $1.85
I was setting up the trade for shits and grins today so I could have ready for tomorrow and just watch the pricing as it moved around today. was going to submit it on Wednesday afternoon based on current pricing and expected move. regardless I hit submit instead of save so I own it. with stock near 229-230 the weekly options were pricing in a $20ish move for earnings. Mike had a calendar spread trade on Options Action which got me looking. $1.85 was too steep for me so with the assumption that the powers that be gets the expected move correctly and a bullish bias gets the stock to 250ish. entered a call butterfly 245/250/255 on this weeks options.
buy 1 of the 245 calls
sell 2 of the 250 calls
buy 1 of the 255 calls
limit order of .35 filled instantly and was 2cents under the midpoint
Just a one lot to amuse myself. Implied volatility is high so if earnings seem good but stock sells off hard I will look at a short put sale. so I might have a win in either direction and .35 not a big loss if wrong. will not hold to expiration since that rarely works out well, just a pop to 250 area should have a decent percentage gain. cant say I follow the stock, the high IV gets it onto my watch list for the moment
square box is rough profit area, a selloff to near the 50day at 210ish gets me looking at a cash secured put sale. best case short strike 185 or lower but 190 or lower is a level to look at also. lets see what happens with earnings and the resulting commentary
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