I like the cash settlement in the rare occasion I decide to hold the trade into expiration as well as having the ability to place 15 point wide spreads in a one lot.
I skipped the SPX trade this week and just before market close today I placed 3 earnings trades. Same mindset on these trades as the SPX trade previously, but these three are all around earnings. TXN reported today after the bell, PG and AAL report tomorrow morning. Trade 3: TXN had a nice spike up to 139 on earnings release but cooled off back to 132 during the call. Will likely expire worthless. tIP BOT +1 BUTTERFLY TXN 100 (Weeklys) 24 JAN 20 137/140/143 CALL @.40 ISE Trade 4: tIP BOT +2 BUTTERFLY AAL 100 (Weeklys) 24 JAN 20 27/26/25 PUT @.20 CBOE Trade 5: This one was a 2 lot but TOS executed them separately tIP BOT +2 BUTTERFLY PG 100 (Weeklys) 24 JAN 20 128/130/132 CALL @.29 CBOE
Amazing, I did a similar trade on TXN, buying yesterday minutes before market close & earnings, then selling just now at the open for 60% profit. Although mine was ATM, while I saw you went towards upside, not sure why? Because of the market sentiment? (I tried to make a few more earnings trades but didn't have time, while some orders didn't go through)
Nice call on this one! I typically like to trade earnings bets directionally. On TXN specifically, 4 out of the last 8 earnings announcements had bullish moves, 2 out of 8 had bearish moves, and 2 out of 8 were basically flat. Not a big sample size or anything but I'm okay with taking a bullish bet on a somewhat binary move based on those stats. I placed one opening order on INTC today. I'm pretty bummed because I placed it in the wrong account by accident so I can't include it in the PnL on this thread. It looks like it'll be about a 300% winner. INTC trading close to 66 right after the earnings announcement too. Oh well... Moving right along... I closed a couple of the earnings flies I put on. Trade 4 Closed: Mild profit on this one. I was having trouble getting a good fill and I wanted to get out ASAP, commissions ate up a decent amount of the proceeds but still ended up $21 ahead. +$21.68 Profit Starting Balance: $1001.75 Current Balance: $1665.15 Cumulative PnL: +$663.40 = Account up 66.22% Trade 5 Closed: Trade went completely against me. I was able to salvage it for a $22 credit. Better than nothing I guess. -$44.32 Loss Starting Balance: $1001.75 Current Balance: $1620.83 Cumulative PnL: +$619.08 = Account up 61.8% Trade 3 still open, will likely expire worthless tomorrow. I'm gonna go ahead and count it as a full loss of -$42.08 which includes cost of commissions. Starting Balance: $1001.75 Current Balance: $1578.75 Cumulative PnL: +$577 = Account up 57.60%
your profits seem very small compared to the amount of comms you pay for so many legs of options or am I missing something? Also Intel closed at around 67 after earnings, I think your trade is in danger.
None of the earnings trades I posted (trade 3, 4, and 5) really hit so I was just trying to scalp them for what they’re worth. My profit target on this type of trade is usually around 250-300%, sometimes more. I also allocate a lot less to this strategy than the SPX strategy in trades 1 and 2. While my account is still small, I plan to risk $40-$60 per trade on earnings, vs $150-200 on SPX weeklys. I’m less confident in the consistency in the earnings trades.
BTW, commissions on ES are absolutely horrible. I trade a lot of SPX spreads & combos, but dread having to trade ES options at night when SPX options aren't trading. I can't make any money with ES options, which is probably also the reason why they have such small volume comparing to SPX options. ES options are basically for suckers and are raided by market makers who can easily offset them with SPX options.
Quick, call Jerome Powell, the market is down! Trade 6: tIP BOT +1 BUTTERFLY SPX 100 (Weeklys) 31 JAN 20 3290/3265/3240 PUT @1.75 CBOE Taking a bearish shot this week. The markets rallied 17% since October and is in a fragile place. In my humble opinion, the Coronavirus is the catalyst the bears are looking for. I wouldn't expect any type of real correction but I'm positioning for a small pull back toward the 20 or 50 day moving averages. Put spreads on the SPX price much better than the call spreads due to the implied volatility skew. I was able to get a 25 point spread for 1.75, which is roughly the same as what a 15 point call fly would price for. Inherently, you're getting more bank for your buck if you're right. Downside is you have vol working against you when it starts going ITM. I manage the bear butterflies significantly different from the call flies. If the sell side progresses into next week, I'll likely tighten the legs of the fly to take out my risk and leave on a lottery ticket. It only takes one nice hit to double this account.
I admire you crazy options folks at times. You have such limited risk it seems(?). The fack you guys doing over there! Virus!