This SPY trade sold at the Buy 1 Limit Sell of 2.21. Its unfortunate because there is a lot more profit in these trades when B2 fills.
Ryan Thanks for the courtesy and effort on the explanation. I´m going to have to chew on that one a bit. Too much on my plate, but little by little. Close out my IYT puts for a little commission loss, but made good on the QQQ puts for over the weekend. Minimum contracts right now, as I lost last week, and reverted to one contract. Been studying the OEX members for trades. Found a few. Trying something slightly new. Looking for a favorite pattern of mine to show up on the daily and then trade when I get an hourly signal. Anyway, all this thinking has me warn out. Going to shut down and go for a swim as it is lunch time anyway. Can´t predict anything right now, the market seems to be choppy in overnight trading. I´ve got to peruse and think about your system a bit. I know iron condors, they are opposing credit spreads. Don´t know what you would call opposing debit spreads, if that is what you were doing? Re-read that and think about it later. There must be some way to trap money out of an Earnings pop, not knowing which way it will pop? Beyond this tired brain right now. Getting hunch backed, too many hours on the computer, time I go swimming mon! Chou!
The SPX is in a 15 year trading range (see attached 15 year SPX chart), but in my opinion if the SPX clearly breaks out above 1,370 the next stop would be 1,450.
I agree with the looming correction, but I figured it would only jump to 16.5 or something that the march 17.5 wouldn't budge but the May would have a little bit of gain. It was a short term play but I wasn't convicted it would jump fast enough for March, although I wish I would have now...I'm already out on the Mays though. I'm fairly new to option trading.
From my experience in earning trades, expect the unexpected 75% of the time. And most of the time, expect that huge unexpected gap that everyone else is always surprised by lol......it's funny, because I've heard people talk about how much of a surprise it was to see some stock jump 15% on such a contradicting earning news, but I've seen it happen so many times, that I expect that everything. I was watching GILD ahead of earnings and it ran up from $37 to $50 in 7 weeks leading to earnings with RSI at OVERBOUGHT. I thought to myself there's no way GILD goes any higher after reporting earnings about 3 weeks ago, and behold it gaps another 10% after reporting earnings. I knew the end was near, but I was 10% off. Imagine all those traders who thought GILD was done just ahead of earnings, then took their loss on the gap up only to see GILD drop to $45 on Phase 1 news in one of their drugs. That right there is how pigs get slaughtered.
Sorry falcon, I'm trying to give you a better explaination, but its hard. For me, I kind of just see it come.....say something like PCLN today. I have this feeling (of course also have 3-4 years experience in trading PCLN earnings) that PCLN will open soft say +10 points tomorrow morning and then just start rallying up throughout tomorrow and hit a high of +30 to +40 before falling back to close out around +25. Here's how I see the other earnings for tonight and tomorrow. I know SINA, it has been a favorite of mine since the IPO about 10 years ago....it was SINA, SOHU, and NTES as the big three Chinese stocks. I feel like SINA will trade higher on earnings, the support at 50-day should easily hold with its first test, and SINA has had so much negative news that I feel like I'm looking at one of those sell the rumor, buy on the negative news trade. I'm not taking any position in it, but I will watch it to see how close or far apart I am from the actual trade. AZO, used to love this one below $300. Above $300, AZO has had tendency to open low and rally back higher, I've seen it done twice over the past 4-5 quarterly reports. Just today, it just marked another all time high, I think it continues, but I feel like it will open lower again tomorrow morning maybe back to $358-$360, then in 2 weeks we see $370. This would actually be a nice spread candidate if the trade plays out as I feel it will. Maybe $360/$370 spread, close the $370 when AZO falls back to $355, and then close out the $360 calls near March expiration date. This is how I come up with my spreads and it may not be as conventional at times.
I bought some Mar 30/27.5 strangles for $.80 on CVI which is on a similar pace as the GILD you mentioned, very overbought but earnings coming out Thursday. I'm just hoping for a large move in either direction because it's been on a good run for a while but has a bit of short interest.
Ryan Okay I´m back from my swim, shower and shave. Was looking at your comment again. Where exactly are you placing your debit spread? ITM, OTM or either side of the ATM? Not sure when I will get to running that on the spread calculator soon. Trying some what if, scenarios. There seems to be most earnings pops, the limited number I checked last weekend were like only for 1% or 2% maximum? Not sure where you would find the 10% pops? I did run across a mention of the historical earnings available someplace this weekend. When I get time, will double check and see what I can find for that. In the meantime, HAL is doing a reversal with the trend, so I jumped in with my minimum 1 contract. Now you guys have me trading stocks as well as indexes. Lot more choices for trades coming up. Going to get more active I guess. Still smarting over IYT this morning. It gapped on the open and I was $100 ahead, but didn´t take it and it reversed. A little slow and put in the sell order, but the darned thing never came back and I ended up closing, losing a bit of my commissions, which was like $10 or something. So not bad there as a loss. Still I had .50 cents and didn´t know for sure what the spacing on such a short trade was. Normally I take .31 cents or so, so .50 cents was good if I had taken it. Cést la vie! The ones that get away. Lets see if I can scalp something on HAL?
So assuming you're in a trade like, how do you define your exit strategy? I don't have a good grasp on that, is that something you do on a per trade "gut feel" basis, or is it completely automated with stops? What happens when autozone opens at $380 or you're right about $355 but not the subsequent rebound?
Scottmo I´m very curious about a strangle on an earnings pop. Tell me how it comes out? I had the feeling it would not make any money on a stock that pops only 2% or less?