5-18-2012 - with no updates from the show / mike im closing this out today at face value. what likely happened is that mike sold another put at some point to "spread it out" but the viewers dont know that. review my alternative trade at bottom..would have come in a max profit.. with stock at 640ish today, will give mikes nontransparent trade a credit of his 670put being worth $30 to salvage this trade with a win.
google docs spreadsheet of mikes trades: mikes trades
------------------------------------------------------------------------------------------------------
5/4/2012 - with earnings coming up next week, this Buy 670 put from 3/28 is now at $9.50..did he spread it out, take profits, who knows. im sure someone out there took the on-air recommendation and is awaiting what to do next. earnings will be the key
4/27/2012 - lets take a look at this trade again, been almost a month since it was presented on air. despite cnbc saying follow @cnbcoptions for "constant trade updates" , mike khouw having a twitter handle (but barely used) and appearing on air multiple times there has been no peep about what to do with this trade..did he spread it out when stock was below 700, did he close for a gain, still holding...who knows. transparency is not a bad thing so lacking that i will assume he is still holding. could have made a comment on tonights show about it while giving a NEW trade on priceline especially since stock is 40points higher than last show. original trade was Buying the May 670 put for $20. as of tonight that put is now worth 6.60..getting close to 70% paper loss. Risk less to make more.
-------------------------------------------------------------------------------------------------------------------------------
4- 7-2012 - alright now, lets see how this trade is doing, been about 10days or so, have not seen an update from CNBCOptionsAction on twitter or anything onair despite their constant on-air promos that say they give updates to their trades and of course mikekhouw doesnt twitter but once a month. the orginal trade is below.. mike bought a may 670 put for $20. today the price is near $10... so pretty much a 50% loss so right now. "Risk less to make more" the show says. will see what i looks like in 2 more weeks. didnt mention a stop / stoploss but will assume a hold until there is an on-air meaculpa.
-----------------------------------------------------------------------------------------------------------
3-28-2012 mike provided a trade on Priceline during Fast Money today and boy..do i have some thoughts.. discussion transitioned for the insider selling segment to mikes trade. his trade seemed to just be a short thesis vs putting this on if you are long the stock for protection. if you are long 100 shares, kudos to you and your bank account. he recommended the ultra simple "buying a put":
heres the link the his clip on the show: PCLN trade on FM
Buying the May 670 put for $20 ($2000)
he mentioned that you could "spread it out". Im going to assume its a short thesis outright. Stock closed today pretty close to 720. if you held this option all the way thru may opex (which includes earnings), the stock would have to drop all the way to 650 just for the option to breakeven..thats a 10% drop just to break even. plus you have no clue what could happen with earnings. The only way this makes sense to me is to do what mike says, to "spread it out".. which means that if stock pulls back then sell a may put lower in strike..like the may 650 that makes it a put spread and potentially locks in some profit. could you be right, maybe, maybe not. This does not seem like a position to hold all the way to opex.
But what if you want to hold to opex and just had to commit that $2000 that mike is paying, then i would do a put spread instead:
Buy the May 730 put for about $46 ($4600)
Sell the May 690 put for about $27 ($2700)
total debit of $1900 pretty close to mikes trade.
But at May opex if stock is at 670.. mikes trade has lost $2000, my trade makes $2100. with mine i start profiting if stock drops below 711..just 10points from now instead of 50.. all this is the assumption you hold to opex.
i would not put on mikes trade. but thats just me.
follow me on twitter @mark_lexus by clicking in the right column for more free trades, charts, and setups
