11may - closing this trade out in the spreadsheet, scott replied to my tweet:
read the original post and watch the video segment again first... a little bit of a conflict to me..says he would be ok buying the stock under 19 (18.60) but then recommends a put credit spread. might be six in one/ half dozen in other but with stock down under 17 today at lunch this credit put spread will realize the max loss. scott trys to salvage the conversation a bit with the tweet about the 17put.. as is common when comments get thrown out on air that they are ok buying stock lower as in selling puts or risk reversals, when that actually happens and the stock is lower the tone of the comments changes. the only thing ill really give credit on this one was his comment that he is limiting his loss by make it a credit spread vs just plain put sale. IMO, poor stock selection, poor strike selection , poor premium selection. Not exactly "risk less to make more" like the show trumpets.
spreadsheet --->>> scotts sheet
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10may - about the worst thing that could happen to this trade did..scotts trade was aired tuesday night so im sure alot of people saw that trade on fast money, logged onto their fidelity account and entered the trade for the next day..maybe they got lucky and got a bit of a price improvement at the open. to summarize some of the things i dont do with credit spreads:
1. i rarely sell credit spreads as an earnings play (i say rarely not never).. for every whoop-de-do AAPL reaction where you pat yourself on the back on how smart you are, you get a CSCO down 15% move and you kick yourself for putting it on.
2. i dont like selling weekly credit spreads..just when you think you have a stock figured out...BLAAMMM. and now you have no time to let stock recover
3. i dont sell credit spreads so close to at-the-money..this spread was nearly right at the money..below ATM if you entered that trade overnight. selling so close to ATM makes it just a coin flip. if you are going to go that close to ATM, then make sure the premium is worth it..like i said below
4. most importantly dont do #1,#2,#3 all at the same time.
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7may
scott has a trade on cisco ahead of earnings, here is the show options action
Sell a put spread (credit put spread) - weekly 19/17 put spread for .40 credit
in his remarks scott wants to be in a position to make money if stock goes up or is flat but is ok buying stock under 19. (that would be a good deal he says). im not a fan of selling credit spreads ahead of earnings. this trade has max profit of .40, max loss of 1.60... selling the 19put makes this trade almost a coin flip, 19 is right at the money, so delta is near 50... with scotts thesis that he wants up or flat move but ok to buy stock lower that seems like a textbook setup to just "sell a cash secured put" instead of a credit put spread.
Sell the weekly 19 put for .45 credit instead. i would not do either trade really. to get any decent premium you have to go so close to at-the-money it brings down the % probabilities of winning trade... 75%+ is my cut off, 50% is just like calling heads or tails. for a credit spread so close to ATM i would want a lot better premium to loss ratio..like max profit of $1.00 /max loss $1.00 vs just .40 credit..seems light. i also dont care for this stock and that cnbc will parse every word from CEO and apply it broadly to entire tech sector all day long.
