Tonight after market close, Apple (AAPL) is going to announce earnings. Probably the most awaited announcement (except Google) that will set the tone for the tech companies. Once I close my FUL positions, I shall try to capture “my” thoughts and hopefully how to play. As a privilege to registered users, It will go to registered users first though. Stay tuned ! (Posted already, if you are registered, you will be able to view it).
Till then, profitable trading
backspread, EarningsEarning Play “FUL” tonight, a case to study
16 Jan 2007 Author: OptionPundit In: Backspread and Earnings
I am planning to play FUL tonight and here is the chart of the stock for the past 1 yr/daily:
Notice the areas around earning announcement, the stock has moved roughly by 10% easily after the earning were announced. That’s what I am looking for, large moves. For my spread I was filled for $2.65 credit—>. Based on this trade, the risk to reward looks like this:
How will I make money? If the stock moves above $32.2, my profit is unlimited, to the extent of upward move. If the stock falls below $27.5, I will make $265 (for $235/investment/per spread) which I received as credit for opening this trade. How will I lose money? I will lose the maximum of roughly $235 ($500-$265) which is required as margin, if the stock stays in between $27.6 and $32.2. Other important factor to look at is the volatility. Current volatility is to the tune of 100% which will be crushed tomorrow after the earning announcement. My buy side therefore will hurt me as well (sell side is otherwise).The spreading was simple; the art will be on how do I close tomorrow. Till then, Profitable trading, OptionPundit
Earnings, FUL, large move, Options, speculation, spreads, stocks, tradingHow to play earnings via spreads?
16 Jan 2007 Author: OptionPundit In: Backspread, Earnings and Options TradingThough I have become an “income trader”, a very small part of my portfolio I use for speculative moves as well. Earning season is gearing-up and I would like to take advantage of large moves that happen around earning announcement. I, however, don’t want to play using straight calls or puts. Instead, I would like to use spreads to benefit from expected large moves in either direction. I shall be posting on this soon. Stay Tuned!
backspread, Earnings, options tradingAbout this blog
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