Results of Credit and Earnings Play

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Here are the results of the earning plays and credit spread. I mentioned y’day that I opened AFFX, AKAM and PMTI for earnings.

Closed AFFX for 9.6% profit. Here are the transaction details:
Closed PMTI for almost break-even (Loss 2%) –
AKAM is not closed yet, but making profit as of writing, 10% profit and still counting.
Closed NTRI for 12.5% profit
Initially opened a straight put for ACLI, but it reverted the direction today. So I converted into Credit Bull Put spread. Doing fine.

Cheers and profitable trading,

OptionPundit

Comments

5 responses to “Results of Credit and Earnings Play”

February 8, 2007

Jim

something’s up with BMC… i don’t think it’s hedging in the
feb35 puts. same heavy activity yest. i bought the
march 35 puts, that was because of an entry error.. meant
to buy the febs, but that’s ok. jus thought i’d share.

Reply
February 8, 2007

Optrader

Would be great if you could post your trades (what kind of spreads you are playing etc..) before hand, if you can of course. When you do these credit spreads, especially for earnings, do you sometimes leg-out, or do you always sell the spread at once?
Do you find that the actual P/L of your trade is similar to what you thought you would be making according to TOS, or do you have to adjust for volatility?

Reply
February 8, 2007

Cobber

Hi OP. Ia ma trying to understand what you did here. You bought a Feb/Mar diagnonal for
a credit and then bought a March put option???

Regards

Cobber

Reply
February 8, 2007

OptionPundit

Jim, Thanks for mentioning about BMC. It was in my list and initially I was planning for a put backspread on BMC. After reading your note and then investigating a bit more, I, after long time, played a straight put on this. It seemed to work like a charm as BMC in after market was down $1.83 or 5%, roughly. Cheers.

Optrader, I generally don’t share the exact trade beforehand as I don’t want my readers to be tempted and place speculative trades without understanding well. I do share the tickers and my strategies are also known. So I think an informed reader can take advantage by connecting these dots. On contrary, monthly income trades I open to registered users quickly after I place those and users may have time to learn, understand and place one of theirs. However, for speculative trades i.e. earnings I plan not to share in advance.

I generally don’t sell the whole spread together for following reasons:
1) Fill is easier by selling legs
2) I might want to take advantage of the intra day movement and sell my inventory accordingly. For instance, AKAM, I had opened an diagonal backspread. When AKAM started to move up after initial fall, I sold one of my 55 put and converted my original spread into a diagonal bull put spread that gave me more delta as AKAM was moving higher. Thus making much more from the same spread as I could have otherwise.

I have to adjust for IV crash beforehand.

Cobber, your understanding is correct.

Reply
February 8, 2007

Optrader

Thanks for your answer. I had a diagonal ratio credit spread on AKAM (suggested it yesterday). But unfortunately during the initial drop I decided to buy back the short puts. Could not have guessed it would bounce like this and got caught in the shorts squeeze. Shows the dangers of keeping a naked position. Big lesson.

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