25Jan - first off im going to maintain that I had the right trade. although all trades below were winners im putting an asterick behind mikes. again my focus is to minimize the cost of the trade so a $1100 trade for a one lot is not what im looking at. the general consensus in the "industry" for risk management/capital preservation is that if your long option loses 50% of value you close it out. like a having a stop with stock. that's the discipline. I did a call butterfly very similar to my recommendation below and sold a cash secured put/sold call spread so I had skin in the game as well. thought is saw the 340call at $3-$4 at one point when stock was near 325 after earnings. if you didn't cash out at some point and held to the very end of the week you had profits. my call spread suggestion below had more. my suggested call fly was at +350% at one point as I was trying to milk for more. ended up closing for chump change in the last hour. the expected move was about $26. that's 26 either way up until opex, not immediately after earnings. so for this instance the move was less than priced. ie the premium sellers were the winners. stock was near 353 at close so will credit mikes trade with a $300 win. the high was 359ish so its close enough to say its a gap fill. that 360 area functioned as resistance as expected
here is the link for the NFLX clip NFLX 24jan
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18Jan - on the 17Jan show Mike Khouw with a trade for Netflix ahead of Tuesday earnings. here is the video clip NFLX clip
I haven't traded NFLX in ages but have had good trades on ROKU. both stocks move together. Netflix is hanging in despite all the competition coming online. is NFLX at the point where it doesn't go down on bad news? to the trade... hard to swallow that $1100 for a call option. stock at 340ish now. for earnings I generally assume that the options market has everything priced correctly. meaning the expected move is about accurate. not always but its something to base off of. the expected move for NFLX is about 23bucks now (add the 340put and the 340call together). so that gets you to about 315ish and 365ish. note on the chart and as Tony mentioned in the clip that there is a gap at 360.
so with a bullish thesis, the expected move, and the gap fill/resistence at 360 instead of spending $1100 on the
Mikes trade:
Buy Jan24 340 call for $11 (its 12.70 now after hours) - need 351 or higher at opex to be profitable. seems exactly opposite of what the show has been preaching previously.. the risk less, make more... the buy call spreads vs just calls when premium is high.
My alternative to Mikes trade:
Buy the Jan 340 call for $12.70 and sell the 365 call for $4.30 = $6.70 debit instead. - breakeven at 346.70 . max profit at 18.30 if at 365 or higher at opex
MarkLexus trade suggestion bullish:
if bullish, if expecting the expected move to be generally accurate, if expecting the 360gap fill and resistance at 360 then instead:
Buy the Jan 24 350/360/370 call butterfly (buy 350call,sell two 360calls, buy 370 call) - can probably get a fill for $1.00. heres the reasoning... mike needs at least 351 to be at breakeven, my call fly needs 351 for breakeven. the center of the call fly is at 360 which is the resistance mentioned. my profit range is 350-370ish. yes at 370 I make zero and mike has big win but that initial $1100 price is the dealbreaker for me. I will gladly sacrifice the "big winner" for a 1/10th cost bullish position. my call fly has max profit of $900 if at 360pin. I guess you could do an 11 lot if you have to absolutely spend $1100. that would be $9900 for a 360 pin.
point being for a directional trade i want to commit minimal dollars.
my call fly - $1.00
my mike alternative - $6.70
mikes - $11
lets see what happens at the end of the week.
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