Tag: Butterfly spread

How to Play Google Earnings, Again?

Google (GOOG) is announcing earnings today after market close. A $500+ stock and famous for it’s move post earnings, it is almost in every “speculators” list to play for the big event.

I covered GOOG earnings extensively. If you are looking for a play based on detailed analysis based, check out the past trades here. There were 4 different types of plays and all were the winners.

So do you want to play again? what is your outlook on how much Google is going to move. If you expect Google to move more than $15-$20, you should not even read further.

I think it may be range bound when it opens tomorrow. It may move $10-$15 but not very much. Of course I may be wrong and I had been wrong in the past. So what to do? I would like to reduce my risk and hence I am willing to spend a very small sum for my views and I am willing to lose all as there will not be not much time left for Oct expiration.

Here is how I plan to trade this-

Buy Oct 520 Put Butterfly and 540 Call Butterfly. This trade can be done for $230 (as of this writing). In order for this trade to make money, Google should be between $512.3 and $527.6; and between $532.26 and $547.7

Goog Earnings Oct 2009

So if someone has a $10K portfolio, this will be 2.3% of capital. If you have a large cap portfolio, don’t invest more than a small fraction on it as you may lose 100% of the capital invested on this. Pls do your due diligence before you invest any single $$. I am personally into this and many other variations for Google earnings.

The GLD trade was closed for nice profits.

All the best, Profitable Trading, OP

October 15, 2009
OPNewsletter : May’09 (+11.2%), Jun’09 (Opening Shortly)
It feels great when a single covered call option spread (done only @ 7.3% of 10K portfolio) can deliver OPNewsletter monthly subscription fee, cover commissions and still deliver profits, without making adjustments throughout the holding period. And what if the newsletter doesn’t get a single cent if doesn’t deliver profits? Welcome to OPNewsletter (A “No Profit, No Fee” Newsletter)! It is up +11.2% (x-brokerage) and +8.5% including commissions for May’09 alone (a 16th positive month out of 17 months.).

As I stated earlier, after many months of waiting, we crossed our 60% portfolio investment guideline. It’s always an advantage if the trading capital was preserved. Yes, we did have a few months of low positive returns, but that preserved capital is an out performance in itself (vs. general markets) and now we can start using this preserved capital for further gains vs. wasting energy in recouping the losses.

Maximum investment incurred this month was +64.4% and we are continuing to use that as basis for returns calculation even though we are now in credit generation phase. We have +51.19% in cash (assuming 10 k portfolio) that we can start using for opening June’09 portfolio shortly.

We are nicely positioned to reap further gains and we still have 2 weeks to go for May expiration. I don’t have to worry so much about the market fall as that will further benefit our portfolios particularly IWM.
1. USO is up +5.36%
2. UPS is up +4.8%
3. IWM is up +7.19%
4. GDX is up +4.04%
5. X covered call was rolled after +23.29% gains
6. HAL was closed for +22.69%
7. AMZN was closed for +15.83% and
8. IBM was closed for +23.01%
OPNewsletter has been using Fundamental, Technical, Greeks’ as well as Market Psychology for trade analysis to create our portfolios and diversified into different sectors (Markets, Gold, Oil, Tech, Retailer, Transports, etc).

We didn’t do an Iron Condor for the 2nd month as I still don’t feel it is the right environment. Though, in retrospect it may seem that it is/it was but I am not convinced. See attached chart, Dow up almost 45 points in 3minutes before close, manipulations any one?

I am thankful all the OPN members (old as well as current subscribers). Thanks for advocating OPN to your friends, colleagues and trading buddies. This has been helpful in adding constant stream of new members and still maintain the quality. I am also thankful to all the members for participating in the forum and expanding knowledge horizon of other members.

If you would like to sign-up or benefit from Jun’09 portfolios of OPNewsletter, pls click here to sign-up for the waitlist.

Looking forward to opening June’09 income portfolios,

Profitable Trading, OP
May 1, 2009
OPNewsletter- Mar’09 +8.8%, Apr +2.4% (Open)

March’09 portfolios were closed +8.8% (excluding commissions) and +5.6% (including commissions). I used up about +46.7% of the assumed 10K capital for OPNewsletter. This result doesn’t include excellent results from bonus trade alerts.

When compared with broader markets, this was probably one of the best months for OPNewsletter. Look at the major market movements since we opened the Mar (Mid Feb’09) portfolio. RUT traveled almost -20% south; and DOW, S&P500 and Nasdaq ranging from -14% to -16%. All this was followed by sharp snap back rallies. Isn’t this amazing, almost 20% back and forth move in one month. I have not researched to find if this is one of its kinds or has happened before. But whatever be case, this is not income trader’s best friend. This was surely not an easy period. In fact one of the toughest and most volatile periods, at least of my lifetime (leaving aside Oct 1987 crash). Hence preserving capital and delivering just positive results itself is good enough. One of the strategy I used was to focus only what was opened and keep cash free to make adjustments as needed. This served nicely without really triggering panic due to shortage of capital. For Option Trading Strategies, We used multiple strategies i.e. Calendars, Credit Spreads, Digonal Spreads and so on. I however, decided not to open an Iron Condor this month anticipating extreme movements which also served nicely (There is not a single losing Iron Condor since re-opening of OPNewsletter).

For OPNewsletter, The best performing portfolio was USO which delivered +22.8% and it was also rolled over to Apr. I expect this portfolio to deliver +50% by July. The worst portfolio was ABT which was almost break-even (+0.89%). MCD delivered +5.5%. A tough month though, it required greek’s analysis, technical analysis, gut feel and past experiences with similar situation (VISA, May 2008) helped sail through this month.

Some of the excellent intraday trades, results not included in OPN tracking, were +42% on SRS, +58% on VIX, CF arbitrage of $6, DECK for +220%, AZO (+27%, +39%, +73%), SKF +20% to +50%, FDS lost to break-even, NKE earnings +22%, DELL earnings amongst others. As mentioned, These results are not part of OPN tracking.

We are nicely positioned for Apr’09 portfolios as well and so far invested only +19.7% of assumed 10K capital. I shall be opening a few more portfolios next week, if you would like to join, pls sign-up for the OPN waitlist.

Those who could trade intra-day, markets offered wonderful trading opportunities, specially on the Expiration day. A smiling butterfly was shared with all the free members as well, that resulted into >+100% gains. Hope folks who followed invescafe/speculative trade alerts (some of those listed above), probably had some good opportunities that I played for intraday trades.

(You may want to sign-up for the Basic Membership (Free until Dec 2009) that I use to share free trade alerts for registered members).

I have been experimenting with several underlying/strategy combos over past 3-4 months, with real money. I think I am ready for opening new Portfolios/newsletter(s) to take advantage from current environment. I shall share more on this later.

One final message, markets are not out of woods yet, pls don’t let complacency set-in, these are extraordinary time and it requires one to be taking extraordinary steps.

Trade Carefully, Trade Profitably, OP

March 22, 2009
SKF Smiling Flies, +100%

The free trade idea on SKF resulted in +100% gains.

First starting with FDX and NKE, I had these puts from the starts but even those who followed the notice and decided to follow the trade must have benefitted as well. Then I shared smiling butterflies on SKF, High Risk High Reward Trade, and it closed for +100% gains for one day holding. NKE was pinned at $45 (GS, AAPL, and POT weren’t really pinned this time). Though I identified GOOG pin at 330 in the beginning but I was biased for it move closer to 325 or 335 and mentioned accordingly on the forum.

Net net, a fantastic, thrilling and rewarding option expiration day. Congratulations to those who benefitted from the SKF/NKE and PUTs as well.

Profitabel Trading, OP

March 20, 2009
Smiling Butterflies for SKF

As I mentioned in my earlier post, an expiration Friday is a Thrilling Friday full of opportunities but mostly speculative. Intrinsic Value driven by Time Value and Implied volatility reduces to almost zero and creates powerful leveraging instrument. On an expiration day 100% of returns are not unusual. In fact I am yet to break my record for +1,200%.

If one can accurately estimates pinning points, butterflies usually offers one of the most rewarding trades. I decided to take chance on SKF expiration and play speculative strategy, High Risk High Reward.

(You may want to sign-up for the Basic Membership (Free until Dec 2009) that I use to share free trade alerts for registered members). I hope you saw my notifications on NKE and FDX timely on Invescafe.

Here is a Trade on SKF. Before you proceed to read, pls note that I am assuming that I will lose all my investment in this trade in case it doesn’t work out the way I want it to. Hence if you decide to follow that logic pls do so with the money that you are not worried to lose 100%.

I purchased 120 and 130 butterflies, 5 strike wide. The overall cost was $0.83 for 130 call butterfly and $0.90 for 120 call butterfly. Total cost US$1.73. Assume 2 butterfly for each, that means the cash outlay is $346. If SKF expires today either at 120 or 130, my potential is to make nearly $600. The trade will make money as long as SKF closes between 116.71 and 1223.32, or $126.7 and $133.2. As of this writing, the spreads are already profitable. Pls note that I may adjust or close early and may not be in a position to share the plan timely. Though I shall update at the earliest via posting in the comments section.

Don’t forget, though these are smiling, it can turn into crying ones (though limited tears)..

Have fun, Profitable Trading, OP

March 20, 2009