That's the reason right there why I'm not jumping ahead of this earning. You take your pick and CAT's not one I want to jump on ahead of Monday morning's report. I've followed CAT since it's raid about 2 years ago with shares falling to about $90. Right now, I believe we're going to get some trade related comments from CAT in this report and it can either be a relief or negative comments that can confirm the market's drop on Friday and push the SP500 right back to 2800. If that happens, I think traders will look at the SP500's 50-day ma to get back into the market. On this current rally, the SP500 has touched that 50-day ma twice on its way to higher highs and higher lows. I wouldn't doubt that move again until it fails. If we're on this counter trend down, then I'll be jumping on any stocks that had weak reports in the past 1-2 weeks (e.g NFLX and FB). That was one reason I used FB has a hedge against my long calls. I went with $5k risk in FB because I expected my AMZN, GOOGL, and CMG calls to total more than $5k on the long side, but I chickened out as the market continued to get weaker over the course of Friday. At the end of the day, I still averaged down, but it was closer to $3.9k only.
My trades have not been doing well lately. Luckily, TWTR brokedown from a trading range last Friday. Shorted it buying the TWTR Aug 17 $2018 at $156-$165 per contract. Today, $298.00 per contract. This is a swing trade so, looking at 3 days to 7 days holding depending on the price action. TWTR probably, can go down a few more days.
When FB broke down, the firs thing I looked at was TWTR and SNAP. I didn't play them out though, so I missed that drop on TWTR. It was ugly. I just closed out a couple of the calls I held, and those are big losses. The entire BABA 190 and 192.5 calls came to a loss of -$2965 total. Also took a loss on AMZN 1900 calls at -994. In addition, I'm sitting on unrealized losses in CMG -621, and GOOGL 1280 calls at -1171. The only thing I have going for me is that big FB 180 put I used as a hedge and that's currently at +8747. Feels like a wash to me right now as the hedge is doing what it is suppose to do. SP500 at 2800 is what I'll be looking for especially given the weak price action in CAT. CAT's headline numbers were good, and shares were above $146 in premarket, but wow, it's barely holding on right now. I feel like the market wants to go lower this week. Watched what looked like a bottom on BABA. I'll test it again here. That drop from $195 to $183 was big in 2 days. I'm looking for a counter trend half that move only. Added BABA Aug 3 $185 calls here.
BABA looks about ready to reach oversold levels on the RSI. One trader suggested looking at the past behavior of the stock on the RSI. Some dip only at the 50 level, others dip at the 40 level and never reach 30 level. I have observed that different stocks behave differently. Usually, what they have done in the past is repeated again!
I have added to BABA Aug 3 $185 calls here a bit lower. Averaging down again getting an avg price of $2.56. It does feel like it and that's why I've been on this one more than the other stocks. I'm practically playing this one for BIDU's report this week. I believe there's a move in play on BABA if BIDU's report turns out positive. If not, then I'll take the loss on this one and move on. I feel more comfortable playing this only because I still have that monster move in FB Aug 3 $180 puts in play.
FB and TWTR both being hammered pretty good today. Your FB Aug 3 $180 puts should be gaining more value!
It is. I'm up +$8.3k right now, was closer to $11k at the lows. And that's why I'm betting on BABA's rebound. I've also just added BA Aug 3 350 puts here under $3.00. With a good chunk of the earnings out of the way by the end of this week, it feels like trade is going to push the market steadily lower. I'm going to test that theory out with these puts. Plus, BA has been in a range between $330-$365, and it feels like we're going to test the low end of the range soon.
Looks like a dead cat bounce. But I took the opportunity to exit BABA 185 calls. I am taking a loss on those BA puts and FB puts are giving some back. I also added MSFT Aug 3 $106 calls. I figure if this dead cat bounce last longer than today, then those stocks that had strong reports this quarter should at least regain their losses. MSFT just happened to be the first one in my thoughts. I'll add more positions on a short term basis if there's value.
Decided to get out of TWTR today. Looking flat and slightly higher. Gave up some profits from yesterday but, did good. I made $2300 total on TWTR for 3 days holding. One of my best trades in 2018! I have losses on some other trades. F looks flat. If it could rally from oversold level, it could go higher! I got calls on F.