Disney trade alternative and comments

 

7 Aug

on the 5 aug show Mike has a trade on Disney by selling the Aug monthly 105/100 credit put spread for $1.63 credit. Carter and Tony add some comments, here is the video clip:

Disney clip

couple points, first as a note that earnings are THIS week and trade is for next weeks options. nothing bad about that but premium is only about 10cents better by going out one more week, slightly better volatility crush by using this weeks.

second, more my taste, the strikes are too close to at the money, with 105 being a 40 delta and stock at 106ish now.. granted Mikes thesis is that stock moves higher or sideways. looking at options pricing right this second, they are pricing in a $7 dollar move by opex. a 40 delta credit put spread is not giving me enough premium for that added risk.. $1.63 credit = $3.37 max loss. more a risk one to make one ratio would be preferable for this delta.

Carter and Tony both have positive comments as well, so going with those thoughts im going to make an assumption that they surprise to the upside. Maybe because of Obi Wan , maybe not and slightly move in excess of the expected move. I will "save" this order and review strikes right before earnings to consider putting some skin in the game. But in order to make the trade i want to pay just a little. 

So my trade would be the Aug12 weekly 112/115/120 broken wing call fly for maybe .15 debit (cheap ass), buy the 112, sell two 115, buy the 120) , profit range at opex is 112-117. 

Stock goes down or sideways or up just a bit, no harm no foul, was just .15 . Mikes trade will work as he discussed, just too much of a coin flip for the oversize risk. 

INTC trade alternative and comments

 

7Aug

on this weeks Options Action show Tony had a trade for Intel INTC , here is the video clip:

Intel video clip

Mike adds some comments, mentions a vertical spread instead. no specifics though. Carters rationale is pretty much only that its so bad its good. Tony has a trade structure i use alot , that being a diagonal spread. Hes buying the Jan2023 35 call and selling a near dated call against , that being the Sep09 38 call, and intends to repeat selling calls. 

my main beef is the stock. i dont see anything on the chart that screams reversal higher. the fundamentals vs AMD are terrible and a lesson i learned early on was that the 52week low list is not the place you look for investments. although tony talks about longer term exposure, thats fine but just seems like a rough place to commit buying power. Also having to go out 33 days in the future to get .40 cents of premium is a little light to me.

Really cant think of an alternative to this trade.. maybe.. and i mean maybe to wait for the stock to actually make a noticeable bottom and move higher.. its trading even lower now than the post earnings selloff.. let the stock make that bottom and begin an uptrend first, sacrifice that first dollar or two before entering. Or call it 38 or higher as it starts to move into the gap to fill. If you are really interested in long term try the JUN 2023 call instead for about $1.20 more for 6 more months

But my recommendation with my money would be NO TRADE HERE , use the buying power elsewhere. "So Bad its Good" might be a valid strategy if the fundamentals where not so bad. a stock is usually down for a reason

Alternative Visa Trade

 5 jun

this fridays Options Action had a trade from Tony on Visa with some commentary from Mike. here is the video clip

Options Action Visa Clip

First off, still being skeptical that technical analysis is more a self fulfilling prophecy than anything else, i dont believe its relevant to pull up a 20 year chart for a trend line. 1 year yes, 2 years ok. 20 is just silly. Tony's 2nd chart has relevance. he notes the 190 level that is now support. Stocks been somewhat rangebound for a while.

Tony proposes a July 210/190 Put spread for $5.16 debit with the thesis of stock returning to 190 area. ok, that supports the direction. what id like to do is find a trade with less initial up front cost. Visa has never been a good options trading stock for me for lack of volatility / low premium.

Using the same thesis that stock returns to test the 190 area, an alternative (cheaper) bearish trade with stock at 212 is:

Buy a Put Calender spread - buy the July 200 put at $4.20 (ask price) and sell the JUN 200 put at $1.46 (bid) for $2.55 mid point debit. Im skipping this weeks 200 put for the following reason... this weeks Put is at .55 vs 2weeks of $1.46 .. i would expect this weeks put to be about .70. this weeks put is under priced or next weeks is overpriced. regardless im getting slightly better premium for that 2nd week of holding it vs two weeks sold individually (all other things being equal).

So now you have the calendar spread at $2.55 . i chose the 200 strike assuming the stock works its way lower to 190 area so eventually the July 200 will be worth near $10. After the JUN 200 expires (best case worthless/max profit) then resell another short put against that Long July Put.. another best case is stock is near 200 and you can sell an even lower strike short put , maybe 195 or 190.

The idea going forward is selling those short Puts continues to chip away at the cost basis of the trade, maybe even making it free if stock cooperates.

both trades will be profitable at 190 at July opex, im just looking to pay less money up front / lose less if im wrong