My option trades

jeffalvinson · Feb 27, 2012

Quote from jeffalvinson:
02-17-12 10:59 AM

Ryan,

Here is a potential earning play with good price movement and dirt cheap ATM March options.
CVC 15.29
earnings date: Feb 28
Straddle:
March 15 calls .95
March 15 puts .75
Debit.............. 1.70 (under 2.00!)

Look at the attached price chart for range.

I.V. on Stock (32) is closer to 52 week low(11) than it is 52 week high (104).
Also a merger/takeover rumor candidate.

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Ryan,

About 10 days ago I posted the info above on CVC.
There is suppose to be earnings tomorrow before the bell on CVC.

10 days ago with the stock at 15.29 the Mar15C/Mar15P total straddle debit was 1.70
Today after losing 10 additional days of time premium, at a stock price of 15.66, the Mar15C/Mar15P total straddle debit is 1.65.
So its lost a third of its time before expiration, but because of earnings volatility its only -.05 cheaper.

I don't see the potential move justifying these debit prices, do you?

Jeff

atticus · Feb 27, 2012

Quote from jeffalvinson:

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Ryan,

About 10 days ago I posted the info above on CVC.
There is suppose to be earnings tomorrow before the bell on CVC.

10 days ago with the stock at 15.29 the Mar15C/Mar15P total straddle debit was 1.70
Today after losing 10 additional days of time premium, at a stock price of 15.66, the Mar15C/Mar15P total straddle debit is 1.65.
So its lost a third of its time before expiration, but because of earnings volatility its only -.05 cheaper.

I don't see the potential move justifying these debit prices, do you?

Jeff

Think of time as synthetic vol. You don't expect the vol to drop into a report, so as time passes vol must rise. Unfortunately the same cannot be said for premiums. Also unfortunate that you can't expect statvol to rise in front of reports. These plays are low-risk outlier bets before earnings. That's really the only utility unless you want to play roulette on the outcome. Not to say that some don't have edge on the outcome.

ryanpatrick · Feb 27, 2012

closed out esrx this morning at $3.45, didn't even read why the shares decided to gap higher today, just took the opportunity to sell. I still have HLF calls, a total loss on DECK mar 100 calls from last week, and 2 PCLN Mar 2 2012 $620/$630 calls bought at $3.70. I thought PCLN would trade to about $620 in afterhours. Now, I need the second part of this to be correct and see that PCLN finish this off at $635 or above and I should be looking at an exit close to $10.00. I might just decide to leg out tomorrow too as PCLN is one of those that trades in the direction of the morning gap.

kinggyppo · Feb 27, 2012

Quote from ryanpatrick:

closed out esrx this morning at $3.45, didn't even read why the shares decided to gap higher today, just took the opportunity to sell. I still have HLF calls, a total loss on DECK mar 100 calls from last week, and 2 PCLN Mar 2 2012 $620/$630 calls bought at $3.70. I thought PCLN would trade to about $620 in afterhours. Now, I need the second part of this to be correct and see that PCLN finish this off at $635 or above and I should be looking at an exit close to $10.00. I might just decide to leg out tomorrow too as PCLN is one of those that trades in the direction of the morning gap.

nice call on PCLN.

sle · Feb 27, 2012

Quote from atticus:
Think of time as synthetic vol.

"Darling, I've been with you for 10 years, but in volatility-adjusted time this is more like a 50 year wedding aniversary"

atticus · Feb 27, 2012

Quote from sle:

"Darling, I've been with you for 10 years, but in volatility-adjusted time this is more like a 50 year wedding aniversary"

lol, I can state w/o hesitation that it is the way all of my marriages have gone.

PCLN is a massif short here. Short shares from avg. of 630.20. I will close position tomorrow once I can trade in vol.

falconview · Feb 27, 2012

The beeeg question is sle, male or female?

pcln earnings jump of 6% ?

(IÂ´m going to have to learn this stuff!)

In the meantime, my HAL trade seems to be going bad. Not yet, but tomorrow? At least IÂ´m confused on direction. Got a bet in, but after the close having second thoughts. 7:30 p.m.

Think I will take a little time tonight and refresh my mind on what the debit spread does again? Here we come GOOGLE search engine.

ryanpatrick · Feb 27, 2012

Quote from jeffalvinson:

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Ryan,

About 10 days ago I posted the info above on CVC.
There is suppose to be earnings tomorrow before the bell on CVC.

10 days ago with the stock at 15.29 the Mar15C/Mar15P total straddle debit was 1.70
Today after losing 10 additional days of time premium, at a stock price of 15.66, the Mar15C/Mar15P total straddle debit is 1.65.
So its lost a third of its time before expiration, but because of earnings volatility its only -.05 cheaper.

I don't see the potential move justifying these debit prices, do you?

Jeff

CVC has been a mover the last 2 reports. I'm talking about -16 and -17% losses the trading day after earnings are reported. At $15.60, we're looking at $13.20 to downside and about $19 to upside. Because the shares are at $15.60 instead of $15, that 15 straddle would be more beneficial if the shares were to jump to the upside. I would have seen an outside chance of that occurring, but this is just based on price action and no fundamental review. Personally, I'd like to see how its earning report created these gaps the last two times first.

Still, I like the upside potential. CVC's RSI has been in an uptrend channel, and there's room before being oversold. On the chart, $15 had been a pretty strong resistance line, until recently. The market is still holding its rally. CVC had 4 straight weak price action following earnings (past 4 quarters), so there's an outside chance that every investor who wanted out is already out, and those who wanted in back at $25 can now buy into it at $18 tomorrow, still a $7 per share savings. the wildcard is CVC's EPS and revenue. Let's say CVC matches $0.23 with revenue of $1.68B and says something about the bleeding stopping, then I think we get CVC up from $15.60 to $17.00. If somehow they beat EPS this time around, the shares will hit $18, but nothing higher. This one's interesting, and it wasn't in my streamer. I had PCLN along with 6 of its options in my streamer, so it took a lot of spaces already.

ForexForex · Feb 27, 2012

Quote from falconview:

In the meantime, my HAL trade seems to be going bad.

HAL is bad

ryanpatrick · Feb 27, 2012

Quote from atticus:

lol, I can state w/o hesitation that it is the way all of my marriages have gone.

PCLN is a massif short here. Short shares from avg. of 630.20. I will close position tomorrow once I can trade in vol.

Interesting, a short sale avg price of 630.20? Then again, I'd have to assume you're scalping here and looking for a 5 point drop. But then again, just by reviewing PCLN's price action in previous reports, the low risk short would have been to allow PCLN to open at $630 tomorrow (I think the open will be closer to $640) and then short at that level, hold it and wait for the market correction to bring PCLN shares back lower possibly into the $560. I don't think we'll see $500 on PCLN anytime soon anymore as it seems PCLN is marking a new trading range above its previous $450-$550.

I sort of see this one like your short on WFM at $80.81. Maybe scalp in a quick $0.80-$1.00 on that WFM short and leave it alone. Since that time, WFM has hung onto $80 as I expected and there's a good chance it could break into new highs over the next few days possibly up to $85 before going below $80 if it even does.