Priceline (PCLN) and Earnings

Published on November 9, 2011

Priceline (PCLN) and Earnings

November 9, 2011

Priceline (PCLN) did great. The earning trade idea that i shared earlier, delivered excellent results and turned out as expected. Generating roughly $100 for $680 risk i.e. +14.7% gains for 1 day holding period, without taking significant directional risk.

Post earnings I also shared two trade ideas with OPN Members. One for a bearish trade if $PCLN couldn’t move past beyond $533 and other was a speculative trade assuming $PCLN didn’t gap-up by $30. $PCLN gapped-up by only $12, thereby increasing by another $30. Those who could play that speculative trade, reaped rich dividends without taking earnings risk. Congratulations.

I have been trading earnings for the past 5 years X 4 quarters, that’s 20 earning seasons. From experience, I can share that earning announcement events are a great way to add accelerators to your portfolios. But at the same time, I should also highlight that no one can predict earnings results with surety. So at best, the chances of win/loss are 50/50. If you allocate large amount of capital for such trades with a success probability as 50/50, that’s recipe for quick depletion of your hard earned capital (There is “No Luck” factor involved in disciplined trading). As a thumb rule, I suggest OPN members not to invest more than 2-3% of portfolio capital in any speculative trade and not more than 3-4 speculative trades overall at anytime. Market  are there and will be there, capital may not. So take care and don’t get too excited with big numbers.

For OPNewsletter Dec 2011  income portfolios, where we invest majority of our capital, we are up +1.6%. Join us if you would like consistency in your investment portfolios. We are not get-rich-quick option trading newsletter. We work hard to be consistent and to preserve capital. Returns are objective based via proper capital allocation.

Earning season is not yet over; I might share some more trades as we move on. So pls stay tuned.

Trade Carefully, Trade profitably

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