BABA- Earnings this Tuesday November 04 (before the bell). Buy OTM calls Monday.

i did a debit call spread on this. made 36%, but i wisb i just bougjt the call instead.

I believe i got the debit a lot less than what it was trading at.

103/104 bull call
103 @2.28 and 104@ 1.92 ish
spread cost $36 per lot.

closed it for $50.
time: 3 days

any suggestions on how i couldve made this trade better?
 
yeah but theres more risk no? i dont even know how i got my contract so cheap to begin withm 2.28? i think it was trading at high 3's
 
crayon851 said:
loss of losinga greater amount of youe debit. in ky case $200 vs $36
More...

If you only willing to risk 1k, instead of buying 27 contracts of debit spread with 0.36 (in which you have to pay more in commission and slipage for teo legs), i will go for a plain 5 contracts straigh call, cheaper (in term of commission and slippage) with unlimited upside gain, and easy to execute/filled.

Both approach have same risk but i believe straight call/put is better in term of risk reward

Spread will only make your broker and MM happy, and reduce your edge at the same time.
 
NOV07 OPTION EXPIRY SUMMARY

The BABA earnings trade was a well planned and executed trade from entry to exit. But instead of a big jump right after earnings BABA actually went below $100.00 and the Nov07 107.00 calls hit a low of $0.04. BABA then made a very impressive and unusual comback to $114.00 during the following 4 days, what I thought was unusual about the move from $100.00 to $114.00 is that it was evenly spread out over the 4 days.

Below I have included a 5-day BABA chart and a 5-day BABA Nov07 107.00 chart. The charts are an easy way to visualize the trade is it progressed.



Screenshot-21.png

BABA 5-Day Chart from November 03 to November 07


Screenshot-2-6.png

BABA Nov07 107.00 Call 5-Day Chart from November 03 to November 07

Blue Dot - Sunday Nov 02 at 5:35 PM EST - Original post with BABA earnings trade idea.
Red Dot - Monday Nov 03 at 9:51 AM EST - Bought 1 contract BABA Nov07 107.00 Call at $1.20.
Green Dot - Wednesday Nov 05 at 12:09 PM EST - Sold to close 1 contract BABA Nov07 107.00 Call at $2.55.


  • Debit: $120.00
  • Credit: $255.00
  • P/L: $135.00 (+112%) (commissions not included)



:)
 
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And what's the purpose of these outright purchases if you don't let them make you a maximum profit. That missed opportunity would have hurt me much more than any other loses I could have made. I have been there so I know how it feels. But on paper... there is no regrets
 
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