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

 

Selling Covered Calls comments

 

4 Jun

going to take the other side to a couple of comments about covered calls as seen in this clip on Options Action

Options Action Clip

The portion referencing to avoid selling covered calls around catalysts.. because stocks can move alot from earnings. thats not untrue. but if you follow TSLA weve seen 10% daily moves unrelated to earnings. 

using the 20delta for your short call is not bad level.. a 16 delta is about a 1 standard deviation move. but why should that metric be any different during an earnings catalyst. the options market is pricing in a 20 delta move there as well and the premium is likely considerably juicer than a normal opex period. I look forward to those catalyst weeks. Flip side your thesis might be bearish but dont want to sell your stock so that juicier premium might be your downside hedge, especially if you sell closer to the money. all depends on your thesis going forward. 

Back to TSLA, ive been following several long time bulls and naturally during the volatile movements the consideration of just "selling everything" comes up. ok, no problem, but think thru any tax implications first and an alternative strategy might be to sell at the money calls instead of sell the stock. TSLA again for instance.. the Jun at the money 700 call could sell for $43ish ($4300) per 100 shares...for 2 weeks. never know what will happen. stock might be flat, might go down so you pick up $43 of downside hedge, might go up so you essentially sell at 743 vs "selling everything" at 700. Is that worth 2 weeks? maybe maybe not.

Point being, i'd continue the covered call selling thru catalysts, adjust your delta if worried. sell a 10delta instead. you will kick yourself if the stock actually goes down and you didnt capture some easy premium

NFLX alternate trade

 

27 May

on options action tonight , Tony has a trade on NFLX . here is the link for the video clip

NFLX video clip

first off, im 50/50 that technical analysis even works. seems to have as many false positives as correct ones or at best a self fulfilling prophecy.. since TA is putting human nature into a graphical picture, IMO the time frame you are referencing should make sense. ie.. going back 5 years on a chart looking for resistance i dont think makes sense.. in other words , is the expectation that a crowd of people bought 5 years ago.. held all the way higher and now after all that time will sell at 240 to get their money back? seems unlikely

my timeframe does not paint such an optimistic picture . i see 2 big gaps down from earnings and still in general downtrend. if your thesis is its-so-bad-its-good, or you just want to take a shot thats something else. Tony comes up with in my opinion and overly complicated partially in the money credit put spread, collecting about $7 ($700).. as stock moves higher that amount decreases and you take profits by buying back cheaper. 

Instead, if for some reason you "wanted to take a shot" here id go with something more straight forward while allow for an additional 30 points of downside if you get the direction wrong... a call spread risk reversal.. using same July Opex:

Sell the July 160 Put to help pay for:

Buy the 195/205 call spread -- midpoint now is debit about $1.00 .

max profit is $10, the width of the call spread, max loss the $1 debit if stock is above 160 at opex. below 160 at opex and without trade management you will be "put the stock"

note that at 160, Tonys trade is at max loss 

i picked the 160 level for it being below even the low on 12may

Alternative to Tony's $TSLA trade

 

22may

below is the video clip from Options Action from Tony on TSLA :

TSLA trade 

Tony is offering a Jun 620/600 put spread for about $7.80 but acknowledging that could get lower based on where stock closed near 665

Two ways to look at this trade. first as a straight up stand alone trade that stock moving lower or second that its a downside hedge.

keeping in mind that the stock does not actually need to get to 600 for the spread to be profitable but also the stock DOES need to get to 600 or lower at opex to get that max profit. 

with stock at 665 and the implication that its moving lower my issue with the trade is that at opex the stock could be 5% + lower but this put spread has not gained. as in if it closes above 620 the spread will expire worthless and you have not made money as a directional trade nor has it giving you anything it it was a hedge. 

My suggestion if you are using this trade as a hedge to further downside is to adjust the strikes higher to get the protection right away vs waiting for a further 5% down move before it kicks in. using tony's percentages.. its a 20point wide spread and paying between $6-$7 is about 30% of the cost of the width.. give or take.

instead, buy the Jun 660/600 put spread. mid point is about $22.50.. nearly 1/3rd the price of spread for the 60point wide spread. But the protection kicks in right away if stock moves lower.

downside of course is the higher price but compare if you entered the 620/600 you would lose 45points before any protection kicked in. 

Both spreads will make money if the stock is below 600 but id rather have some protection between 665 and 620 also. 

If you are an advanced trader and have enough buying power, in order to reduce some of the cost of that protection (the $2250) , consider selling some upside call spreads to help offset. The Jun 800/810 is midpoint $1.60 credit now, selling a 5 lot there brings in $800 to help pay for the protection.

alternative to Mikes $TSLA trade

 

31 oct 2021 - lets to a quick update to mikes trade idea and my alternative... big win for mikes trade. give credit where its due.. the sell Jan650 put and buy Jan 850/900 for near zero is going for $30ish now ($3000) .. that short put still has near $10 in value to decay and like i said below even though the stock has blown thru the top end of the call spread, the max value will not be realized till near opex in Jan as the short put and short call have to decay away.. but $3000 is a good win if you are taking profits here.

My alternative trade below was sell the Jan750 put and buy Jan 850/940 call spread for slight credit.. thats going for $53ish now ($5300).. another grand slam.. same comments, even though stock is 200 points higher the short put and call need to decay away to get that max profit. max profit is $9000 on this and $5000 on mikes... if stock trades sideways for 2 months both trades will go out at max profit... good win/ win here.. you decide if you want to exit all 3 legs or typical thing is to buy back the short put.. your call .. buying back the put frees up alot of buying power.

16 oct 2021

been a while since ive posted on this blog.. when i wasnt working around 2010 after financial crisis layoff i was commenting on the weekly trade suggestions from the Options Action crew. just no time outside of catching their hits on twitter. 

This week Mike and crew discuss TSLA which im 95% all in via in the money leaps from 2022-2024 at 650 -750 strikes and then selling short calls against for premium. the occasional short put selling, etc also

With earnings coming on oct 20 after market and stock up 40points to 843 or so the last few days, Mike suggests a risk reversal call spread for Jan 2022:

Sell the 650 put at $21.10 credit and use that to buy the 850/900 call spread for near $21 debit .. all for zero. i like the idea and Mike and Tony mention all the other points that often get overlooked. by selling that short put you have to commit buying power for the duration of the trade and as tony mentions that by buying a way lower put you turn it into a sell put spread to buy call spread trade with reduces the buying power needed. 

the max profit is not realized until opex even if stock moves past 900 and even on a slight down move the trade will show a mark to market loss until eventually the short call (800) and short put (650) decay away.

Note that you would have to hold this trade for 3 months, check me on this, might include the next earnings in Jan. 

I have an alternate based on mikes trade. the thesis being that if stock moves to 900 its going to overcome that resistance and keep on going. regardless of reason, deliveries next quarter, yearly deliveries, improvement in ramping up production at other plants or cyber truck.. whatever, if you are bullish then id expect maybe a pause at 900ish then all those cup and handle people come in, etc .. point being im going to give the upside more room to run but still for free. here we go: instead of selling that Jan650 im going to assume more bullish stance going forward or at least less bearish after earnings....

Sell the Jan 750 for $35ish credit and use that to buy the 850/940 call spread. all for about slight credit. max profit capped at $9000 per vs mikes $5000 . downside of 750 is 26delta. again if it breaks 900 also the "to the moon, next stop 1000" will be out in force

i will "save my trade on etrade, what i really want is a decent down day in order to ramp up the Put premiums.. that would be the day to put this trade on... adjust the call strikes though. i will keep my eye on this .. 

here is the CNBC clip im referencing

TSLA video clip

$LOW Options Action trade alternative

23feb - mike and carter with the trade on Lowes, earnings Wednesday before the bell. here is the video clip LOW clip  i dont follow Lowes directly but Home Depot is on my watch list. mike essentially with a diagonal spread

Buy the Jun 125 call
Sell the Feb 132 call
net debit of $6.57 for a one lot

thesis was that the weekly option pricing is elevated because of earnings, thus buy the Jun 125 which is at the money. best outcome is that stock moves up to near 132, the Feb options expires worthless and the Jun option gains in value. 132 being about at the expected move. ok, makes sense. then again its just not my style to buy at the money options nor spend $657 for a directional trade. too pricey for me. obviously if stock moves down from earnings or overall market the trade is a loser. so you need an up move.

my preferred trade if going directional is a calendar spread. but the Feb28 /Jun 130 is still over $3 debit. next up is a butterfly, mike chose 132 being near the top of the expected move so i will use that strike as well. again trying to be cheap so if im wrong its just a few bucks, under $100 ideally. so given the assumption that stock moves up and is near the expected move of 132 at end of week the Feb28 129/132/135 call butterly priced out at .36 for a one lot. a 3 lot gets you to $100 max, which is also your max loss, max profit on the 3lot with at 132 pin is near $800.  profit zone at opex is 129-135 , if stock moved up after earnings on Wednesday morning i would exit this at about $1.00-$1.50 if i could and take the 3x-5x win and move on to the next one, if youre going to roll the dice and try for that 132 pin at least sell enough prior to get your initial debit back. I would rather risk .36 vs $657 if im wrong. risk less make more. 3 bags full. note that the stock is near 52week high now so 132 well above . enter this trade Tuesday based on where the stock is trading at that time.

$USO Options Action alternative trade

15 feb - mike with the trade for USO and Carter with the charts. pretty straightforward. Buy the Apr 11.50 call for .30 on a play that oil rebounds a bit. here is the video clip USO clip

as mike said the USO was just over 13 couple weeks ago. this segment got me looking at a couple of different trades. in general its rare that I buy an upside call, preferring to be a premium seller. but also along with most people thinking that oil will rebound at some point after the corona virus has run its course or a geopolitical event.

I first looked at my go to trade of buying a DITM call from jan2022 and selling a nearer month upside call. but not wanting to lay out a lot of cash to do so.

Second trade I looked at was doing a calendar spread based on mikes thesis. as in sell a nearer 11.5 to buy that Apr 11.5. but the IV difference between a Mar and Apr 11.5 is nearly zero so unless the thesis is that USO move up but not over 11.5 at Mar opex to expire worthless but Apr 11.5 increases in value, youre not getting the front month decay as hoped for with calendars.

Lastly looked at a Super Calendar using the Apr / Jan2021 , with the intent of letting the short front month reduce the cost of the long call in Jan2021. example:

(after hours pricing)
Sell the apr 12call at .20
Buy the Jan21 12call at .85 for net debit .65. 
thesis is to let the Apr12 expire worthless and resell a May/Jun 12 or 12.50 to continue to reduce the cost basis of the Jan21 calls for the move back towards 13.

.65 is not much of a debit for a one lot / $650 for 10 lot . my history with calendars is that many times the stock move up faster than expected and thru my front month short strike so I end up closing the entire trade much earlier than expected since im not gaining anymore if the stock goes thru the short call (lose on the front month short call while gaining on the longer term call). point being I first looked at the 11.50 level strikes for this. debit is a few cents more but im agreeing with mikes thesis that it does a rebound short term. but went with 12 strikes. personally think the better rebound comes later in year. Might actually put this trade on. see how it prices out in the morning.

The Most Useless Options Action segment ever $TSLA

hard to put into words as to how useless this segment is /was. Chalk it up to a video version of Click Bait. I don't watch CNBC during the day except the occasional Fast Money halftime and the Fast Money podcast replay in the evening (not watching/listening to CNBC during market hours has significantly helped my trading ive noticed, I get better info from my twitter stream, plus some porn.. wait, what?), so I chalk this useless segment up to trying to get eyeballs for the show since they will cover TSLA.

here is the link to the video clip  Tesla clip

so number one, Tony discusses a trade he saw on TSLA.. which Is cool and all but its for the weekly options...as in they expire "tomorrow" being Saturday 15Feb and the show is filmed after hours Friday. which means the options have ceased trading, ie the viewers can not follow along.

secondly, the "trade" is a 680/675 put spread for .75cents. granted the trade may have crossed in the morning and clearly was hail mary lotto type trade for the stock to sell off during the day. didn't have to drop all the way to 680 but a rapid selloff lets say half way to 730 and the "spread" will pop. unclear if that's what the thesis was or was it risk .75 ($70000 per Tony) to make $4.25 ($400000). doesn't seem like a "smart money" type trade on day of opex. point being is this the type of trade to throw out there to the viewers. of all the things to cover. might as well have just said, "hey guys I saw this trade cross today on TSLA, you cant do it yourself because the market is already closed, but we needed to fill 1:30 minutes of air time".

but if you think about it maybe this trade was brought on by a previous TSLA segment , I think it was last week where mike gave the example of the 800weekly call being .05, then next day over $100 and then going out worthless. wonder how many viewers were lured into that to buy the super cheap options for lotto plays. hope not

would have rather the show spent a minute reviewing mikes previous TSLA trade


personally I have an alert set at 750 to get me to pay attention and another at 735...735 gets me looking at a Put sale with best case at or below the 50 day near 530area. technicals might not matter but its something to shoot against.

FOLLOW UP #2 to going from bad to worse $TSLA Options Action trade update

24 feb - damn son.. the old bait and switch. after all that below. i see this tweet today that instead of the trade mentioned to followers and then referenced on the show, this trade was entered TODAY

im sure some followers/viewers were surprised to see this come across. some im sure went ahead and did as recommended and sold the Mar900/950 call. not cool man. so if you did nothing..the original Feb800/850 call credit spread was exercised on you over the weekend resulting in max loss of about $36 ($3600) per lot AND if you did not follow his tweet AND just saw todays tweet and went ahead and sold the Mar800/850 call credit spread, was about $23 credit when i looked earlier ($2300 credit).. so again a $1300 loss from the roll.

now best case need stock to drop below 800 at Mar opex. im going to keep watching to see what other slight of hand surfaces.

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23feb - i don't "watch" Options Action, i listen to the podcast over the weekend and see the video clips from OptionsAction on twitter that i link to on these blogs which is why i missed this.. turns out the show did have a quick hit on this TSLA trade and the end of the segment where Tony talks his winning DPZ trade. the TSLA clip is not on twitter so i missed it and the DPZ clip ends prior to TSLA comments. but after "hearing" it today im even more pissed / disappointed. mike essentially mentioning that he tweeted the roll to the Mar 900/950 call credit spread. saying the Feb spread expired. NOTEABLY ABSENT was mentioning that the spread expired at Max Loss and that selling the Mar900/950 essentially costs you $3200 per lot. like i said below " but this advice is vague , slightly misleading, or at best- selective on the information disseminated." could really be more transparent. too bad since i like mikes well thought out trades and cool demeaner vs Nathan always being Debbie downer. the takeaway is what ive been doing the last 10years with Options Action. use the trade suggestions as an idea generator / strategy generator. for instance at the end of the SPCE clip (not included on the twitter version) Tony talks about how he has been selling Puts to finance Jan2022 long calls. that was interesting and got me looking at pricing..good idea. didn't follow but good idea regardless. don't follow the trades just because they are on air. their performance is on par with yours. its your account

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22 feb im not often surprised until this trade. start from the bottom and read the updates so far. i spotted a few people on twitter that followed along and did this trade and mike responded as such on Friday:

note the viewer is also mentioning that a roll is going to be a healthy debit. so mike is going to roll to the Mar900/950 call spread...seems simple enough but what is not being mentioned is the crazy price. has the short Feb 800/850 call spread (as in needs stock under 800 to get max profit, remember stock was 750 at trade entry).. so to roll to the Mar900/950 the Feb800/850 has to be brought back for $49ish and then the Mar900/950 call spread sold. this roll costs $32 debit ($3200)..that's nuts. stock is at 900 now so need stock to be under 900 at Mar opex to get full value of the call spread. subtract the roll $32 so really need under 868 to be breakeven on just the roll. that 868 area is about a 61% delta meaning a 61% chance that stock is ABOVE 868 at opex, so to breakeven on just the roll needs a 39% event to happen.

because the Mar900/950 call spread is not bringing in enough premium to cover the max loss of the Feb 800/850 spread is causing the huge debit

My Option #3 from below to just close out the whole thing for a $23 debit ($2300) and move on. i cant understand the logic off SPENDING EVEN MORE than this exiting amount just to keep in the trade because now you have spent $32 to roll plus the original $3+ to enter=$35. leaves you with a potential max profit of $15 on that Jun800/850.

need a series of things to happen to salvage this by Jun. first a close below 868 in Mar to get max profit from the "rolled" Mar900/950, and then assuming another credit spread somewhere for Apr / May . whats messing this up and what i didn't realize would happen is that the Jun800/850 is not gaining in value as much as i would have thought based on how high the stock went.. with the stock at 900 i would think a 800/850 call spread would be priced near full value but its only going for about $25ish now. the loss of the Feb spread far outpaced the gain of the Jun spread (which tends to happen if the stock moves way past the strikes)

a couple things come to mind when i saw this suggested roll. "risk less make more", "your first loss is your best loss", "don't throw good money after bad" . now having said all that if youre going to do this you need to think thru what to do at Mar Opex..

1. what happens if stock is above 950 (youre new Mar 900/950 gets a max loss and the Jun800/850 will gain some more).. but what do you do then
2. what happens if stock is between 850-868 (between top range of Jun spread and below breakeven of the roll/March spreads expires at max value), are you hoping for just enough gain on the Jun spread to make the whole thing a scratch?
3. what happens if stock goes back under 800 (and now your Jun spread starting losing value)

not a good position to be in. im sticking with my original gut calls on this, was not a compelling trade from the get go, better to take that first loss and exit everything and if necessary reposition yourself using better strikes vs trying to squeeze a scratch out of this one. but really disappointed in the handling of this trade by Mike and the show. we all have losers, we all try to minimize the losses, but this advice is vague , slightly misleading, or at best- selective on the information disseminated. comes with the territory of being trader on CNBC i think. has to suck to get bombarded with the "what do i do now?" "what do you recommend?" type questions but that's also part of the deal. Options Action has always been selective on what trades to cover and noticeably opts out of many losing ones. maybe for ratings. i remember years ago when i paper traded most of the trades displayed and a few of the "regulars" where consistently having losing trades (bricks). scott nations was a master brick layer. hopefully im wrong and all this works on in the right directions to at least breakevens. TSLA is turning into an Options Action widowmaker.  comments / alternative trade suggestions welcome
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19 feb - crazy that I typed this below on 9 feb …"how does it look if the stock is at 900?"... so caught a tweet from mike today responding to a viewer that followed the trade

 i think im doing this right but here goes. (stock 900+ today and Feb opex Friday)

current value the Feb800/850 credit call spread $49+ debit (as in received $12.70 at sale, and would cost $49+ to close) = $36ish loss
current value the Jun 800/850 long call spread $26 (as in collect $26 if closing today, spent $16.25 to enter)= $10ish gain
net net to close the original trade i come up with a debit of $23... you spent $3.60 to put on the trade and would cost $23 more to close it.

mike is saying to roll the Feb short call spread up and out to March but not being specific about strikes..so i looked at the prices of rolling..

Roll option #1 - roll the Feb 800/850 short call spread to the Mar800/850 call spread, that costs $16+ debit to roll

Roll option #2 - roll the Feb 800/850 short call spread UP/Out to the Mar 850/900 call spread, that costs $22 debit to roll
so you see rolling closer to at the money you have to pay more. i really hope im not doing this correctly because its looking like a shitty deal if you followed along. would need stock under 800 on Mar opex to get max profit on the "rolled" call spreads

Option #3 - close the whole thing and take your lumps for $23 debit and move on to the next trade. i will try to roll as often as i need to get back to breakeven (scratch). sometimes doing a slight debit if im also selling the other side.. such has roll the Feb to Mar for the $16 debit AND if i sold a call spread for more than $16 credit.. so the call spread pays for the roll. but $16 to just roll is way out of my range. maybe take the loss and do a review of how you got into this trade and if it meet your criteria from the get go

Option #4 - depends on your conviction for this trade, your account size, and your thesis on where the stock will be on Mar opex… the only way i can see rolling to not pay is to increase the size. ive been playing with a one-lot so if you roll the Feb 800/850 to Mar 800/850 do TWO lots of the Mar800/850. essentially selling an additional Mar800/850 credit call spread.. this roll ONE Feb for TWO Mar lots shows a midpoint credit of $15 using after hours pricing. so now you would have a long Jun800/850 and (2) Mar800/850 short call spreads. tough call to make.

i really hope Options Action hits this one on Friday for an update. Mike normally doesn't have a lot of bricks.

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15 Feb  - after a week still not seeing anything compelling. granted the Feb options expires this week  so hopefully OptionsAction / Mike does the viewers a solid and updates the management of this trade. when looking after hours this 4leg trade is worth $3.85 debit at midpoint. as in you paid $3.60 to put the trade on last week and to exit would have to pay another $3.85. interested to see how this turns out at Feb opex and with the secondary stock offering announcement


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9Feb - Options Action show featured another trade for TSLA, have to admit I watched this clip a couple times to wrap my head around it . here is the video clip TSLA clip . even after watching a couple times im not 100% certain as to what Mike wants to happen.

Sell the Feb 800/850 call credit spread for about $12.70 credit (using after hours pricing)
  and also
Buy the Jun 800/850 call debit spread for about $16.25 debit

Total debit for the 4leg trade about $3.60 midpoint (super wide bid ask)

Mikes explanation could have used more details since the show tends to be for beginners/intermediate level traders. this trade is similar to a straight up calendar spread, such as sell the Feb800 and buy the Jun 800 but with less premium.

So is mike trying to play the difference in IV between Feb(97ish) and Jun(70ish). as in selling the Feb credit spread since the premium is elevated compared to Jun, as in the Feb spread decays faster than the Jun spread turning that $3.60 debit into a credit (profit) when Feb expires... and that's the whole trade?

or is it sell the Feb spread for the elevated premium, best case it expires worthless AND THEN resell a March 800/850 call credit spread, bring in more premium. premium that is above and beyond that original $3.60 debit and ideally repeat until Jun?

or is the thesis that he is bullish on the stock thru Jun, hence the Jun call spread, and using the Feb call credit spread to help finance it. essentially spending $3.60 for the Jun 800/850

I use etrademonster and will sometimes look at the Analysis Tab and even after that im having a hard time modeling this out as to where I would make money at Feb opex and beyond. Seems to be the ideal would be stock is slightly under 800 at Feb opex, Feb spread expires worthless (you keep the full $12.70) and the Jun spread increased in value. But how does it look if, as Carter mentioned, the blowoff top from this week was the high, how does it look if stock closes at 650 at Feb Opex or how does it look if stock is at 900 at Feb opex. those are extremes I know but no one expected that price action for the last 10 days either. ThinkOrSwim or other platforms may have better modeling but im not getting a comfy feeling on this trade. seems like threading the needle a bit. that feb800 call is a 40delta still ie 40% chance stock is 800 or higher at opex. ive been operating in the 20-30 delta range with good results

would have liked to see more of an explanation as to what scenarios this will be profitable and which ones would be losers. such as max profits on this trade will be XYZ with max loss potential of 123. I will watch this one to see how it turns out and hopefully the show / twitter has an update at / near Feb opex.

I have a position in TSLA , Sold the Feb 505put at $4.20, was 5delta at the time. my thesis is to look for 25-50% of max profit wins to close out. the move in the option pricing are all based on the movement of the stock with not much IV decay. Also a straight up Put Sale if the position is threatened I can roll it out and down for credit easier than any credit spreads. I just check the pricing after hours, that put is $3.30 ish and I could roll it out 2 weeks into a March weekly and down 30+ strikes still for a credit. for my style of trading its a bit more straight forward. will watch mikes trade though, like to see how it turns out, might learn something new

$DIS Options Action trade alternative

2feb - Tony with an earnings trade on Disney, earnings on 4feb after hours. here is the video clip Disney clip

pretty straight forward by buying a March call spread. stock is 138ish as I type. buying the Mar 130/150 call spread for $5.30. as he said its already 3 dollars in the money. essentially a bullish trade. stock was green on Fridays 2% market selloff but has been hit by the recent virus news and I believe shutdown of theme park in china. so im thinking that the earnings will be all Mandalorian and no virus. virus will be the guidance for next quarter. I would prefer to have the gap fill to 131ish first for a Put sale below the 127 level.

so again, as mainly a premium seller im having a difficult time swallowing a $5.30 debit on the trade despite being the March opex. i always look to limit the price im paying. expected move is near 8 dollars now. Tony mentions the high IV as well. If you have a bullish thesis near term despite the virus overhang instead of paying $5.30 try this calendar spread instead. the expected move gets you to 145-146 level:

Sell the Weekly 149 call at .82 (IV 53)
Buy the March 150 call at 1.85 (IV27)
net debit near $1.00 if you get a generous fill

im thinking the earnings will be good based on the Disney Plus numbers, but caution for the next quarter because of the virus so id expect an initial up move. see the IV difference in the weekly vs the March. if an up move the IV reduces more in the weekly, less in the March. my conviction for an up move is not strong enough to do a Put sale here, would rather see what the reaction is. with my trade if im wrong im only out a dollar vs the $5.30 in tony's trade. but tony would likely close it out prior to full loss. rather risk $1.00 vs $5.30. both trades make money if we get that up move. Risk less make more. For calendars i look to close the whole position within a day or two. i dont try to let the weekly call expire worthless and hold the longer dated one and /or resell another call. if I get the move in my direction I close the win and move on to the next one. whenever I try to get too cute it always costs me. Put this on Tuesday prior to earnings based on where the stock is at that time so you can adjust the strikes.

small win $UNP Options Action Trade alternative- closing

Jan25 stock at 186ish at opex so the you collect the full value of the short put and short call if you held all the way and the May 190 call is nearly unchanged. so about a $200 winner on mikes trade. im sticking with my suggestion #1 from below since the may190 call is unchanged... sell either the May 195 for $4+ or May 200 call for nearly $3 still, to bring in more premium and lower the cost basis. or sell the Feb 190 short call for about $2 in premium turning this into a calendar. don't let this $200 winner turn into a loser. point being the trade is not over just because 2 of the 3 options are not on the board anymore. you have to manage that may190call. you need stock at 196ish at may opex to just be flat with todays results. consider that. im by nature a premium seller so im always trying to limit my debits or bring in credits on trades.

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Jan20 - haven't seen this trade structure on air before. the sell strangle/buy longer dated call or the sell calendar/ sell put trade. don't follow and have never traded UNP but some comments on the trade. here is the video clip from the show UNP clip

using after hours data on MLK day. stock at 185ish. expected earnings move is $6,  Mike is :

Selling the Jan 24 177.50 put (collecting .78)
Selling the Jan 24 190 call (selling the put and call makes is "selling a strangle") - collecting $2.25 total
using that money to Buy the May 190 call for $6.70 (total outlay is $4.45 debit)

$445 is not exactly cheap for a bullish upside call. risk less make more. also discussed by tony was you can consider this selling a calendar(sell the jan24 190 call/buy the may190 call) and selling a put. as I type the IV for the jan24 call is higher than May which is should be but not super elevated. IV for Jan is in the 30's, likely be higher on earnings date. the difference of Jan IV to May IV is less than 20points. does not make me interested in selling premium at all on this stock. for example, NFLX IV is 60+ for the earnings week and 30+ difference to the Apr option.

suggestions:

1. if you absolutely positively have to do this trade, consider also selling the May 200 call for $3 turning that May position into a call spread and reduces the total debit to about $1.45, max profit above 200 in may is $8.55 ($10 from the spread - the 1.45 from debit). you can also sell additional 190 short calls for Feb, Mar for further credits if you get a move higher. remember since you are selling at put, you need that buying power/margin to do that.

2. if you absolutely positively have to do something similar, consider just selling the strangle (if you have the buying power/margin to sell naked calls). don't buy the May call option. Collect the $2.25 premium. your breakeven at opex is 175.25 downside (177.50 put-2.25premium) and 192.25 upside (190call +2.25 premium). you profit in that range. no ifs and or buts, close this strangle the day after earnings. Then if there are compelling results or commentary look to put on something for May opex

3. if you don't have much buying power (enough to sell that put), consider just doing the calendar portion. delete the 177.50 put sale, but will raise your debit to $5.23

4. No trade(my choice). nothing compelling here, not enough premium. Spending $445 per lot does not get my attention. I prefer to be a premium seller or spend minimal dollars for a directional trade. lets see how it works out

$NFLX Options Action trade alternative-closed

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.

$AAPL Options Action trade alternative

3 Jan Options Action show has Mike essentially selling a covered call on stock you own. here is the clip AAPL clip

Selling the Feb 315 call for $6.00 stock at 298-300ish

what mike is saying is all correct. where I differ in strategy is that this call expires in 47 days. so you will have time decay during that period. BUT earnings are on Jan28 and as we all know IV increases into earnings mainly on the weekly options of that earnings week and not as much for the time periods after it. point being the increase in IV (the price) of this call will offset much of the time decay. as in you are not getting much decay between now and Jan 28 if stock is sideways

I would prefer to sell the Jan24 short call either 315 or 312.50 to get $1-$2. get some premium and or allow the stock to work higher, THEN sell another short call for the Jan31 opex based on where the stock is at the time. Mike went to a 30delta on this one so go with that as well. THEN sell something in Feb.

bottom line I feel like im not getting the decay in selling a Feb option right now. both will work im sure but I want to take advantage of the IV increase on that Jan 31 options. selling a Feb now feels like im leaving money on the table for 2months.

for the purpose of this alternative against long stock:

Sell the Jan 24 312.50 for $2.00 (midpoint price after hours) 20delta, 19days till opex

final update to Options Action $SPY protection trade

9feb  - Scotts Feb320/300 put spread from below is now at .63 , so about 70%ish loss since entry if you still hold. like I said below, if you buy an "insurance" or "hedge" position, you need to have a plan on when to exit that insurance. I guess hold all the way to opex in case the market crashes is a plan but you can quickly add up the losses on just the insurance plays. I exited mine with a slight win, hopefully your rolled or took profits also along the way. I don't follow Scott Nations on twitter so he may or may not have posted an exit as some point

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1Feb - finally got that selloff everyones been waiting on and the selloff where having "insurance" helps. lets see how the trades are looking from below:

Scott Nations Feb320/300 put spread at $2.90 is at $3.42, up 22 cents since last update. the time decay is eating into the returns. up 18% from entry

MarkLexus Buy Feb320/305 sell 334call at $1.37 is at 2.92 up $1.55 since entry, and a double. the short 340call is a 2delta now and worth couple cents.

full disclosure a couple days after my initial post I entered into my suggested trade minus the short call since im not long the underlying. $2.50debit, I closed that at $2.85 Friday afternoon for some lunch money. was looking like the spread would go out worthless but the down move got it back into the green so I wanted to close it as a win and since only couple weeks left to opex

going forward depends on your thesis, do you expect the market selloff to continue and both trades will gain in value (note that neither spread is in the money as I type so time decay will continue to grind away your profit/protection. or do you expect a rebound in some fashion. You have to have an exit plan on your "insurance" trade too. im thinking we got that big move that insurance is for, granted the market ran past the strikes so the profits on the insurance were not dramatic, also you are running out of days left for these Feb options.

Suggestions:

1. if you absolutely positively need to have an SPY insurance trade, consider rolling out of both of the trades and using that profit and putting on a trade in Mar. , the 320/305 put spread is going for $3.67ish so just a small debit to roll and gain 30 days of protection.

2. take profits. I did

3. hold for further downside. would not be my choice like I said. just be aware that the time decay is working against you. if you decide to hold for an expected further downside move AND you did my trade AND you are long the underlying, consider closing the 340call and selling the 332.50 call for about .75 additional credit. its at 15delta.

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5jan - update to current value of each trade from below with SPY at 322.41:

Scotts Feb320/300 put spread at $2.90 is at $3.20 now for +.30
MarkLexus Buy Feb320/305 sell 334call at $1.37 is at $1.78 for +.41

both have appreciated but both are an "insurance" trade, not a quick scalp. keep holding both in case of IranBoogaloo2020

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27dec - well well well, look whos back on Options Action. Scott Nations, I remember him from years ago being on the desk and rarely having a trade to offer up, just commentary on Mike or Dans trades. Guess he drew the short straw with everyone off for the holiday. so Scott actually comes right out of the gate with a trade on SPY for protection. here is the video clip.... SPY clip

I generally don't have anything against having protection on but I would chose different strikes and still try to minimize the cost even more if you are already long the shares. Scott is buying the Feb320/300 put spread for $2.90 ($290 per one lot). quick math at opex and stock below 300 this trade max profit is $17.10

I am guilty of this many times when selecting strikes by picking nice round numbers, instead for this trade I would reference the chart first. assumption being that on a pullback the 50day near 310 or the low from early Dec at 307ish might offer some support so my downside strike selection would be based on that area. also if the thesis is a possible selloff (and you are already long the shares) I would also sell an upside call to help finance this insurance put spread. selling the Feb 334 call for $1.30. its at 20delta which means 80% chance of profitability on the call sale. you still participate in upside move to 334.

my suggestion:

Buy Feb 320 put
Sell Feb 305 put
Sell Feb 334 call
Total debit is now $1.37 instead of the $2.90. your max profit if stock below 305 is $13.63

im always looking for ways to spend less money putting on a trade since I prefer to be the premium seller most of the time.

exiting the Options Action Walgreens $WBA trade alternative

12 Jan - really think Options Action should have covered this trade this week since the stock got crushed. I don't follow the stock and outside of catching Mikes tweet on 8 jan I haven't looked at until tonight. worst case scenario happened. choice #3 from below would have been the right call. so if you are married to the stock /or are going for the full year of the Dogs of the Dow theory, mikes tweet is my suggestion as well. my alternative trade is also a loser. I take comfort in that per my initial notes below I would not have entered this at all.

Better course of action might be to sell the Feb 55 for $1.20 and hope stock works up a little to either resell something for March for $1 ish or to let the stock get called away for $5620 effective.. or just take your lumps and sell this POS and move on to the next one.

Mikes 8jan response to a viewer:

Carter can update his thesis on $WBA stock, however for the options piece one can cover/buy back the short January 60 calls for .06. If CBW suggests holding $WBA, may also consider "rolling"- selling Feb $57.5 covered calls @ 1.10

@OptionsAction

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3 Jan - Options Action with an update on this trade, here is their clip Walgreens 3Jan . essentially said to keep holding. since the initial show the stock is up 70cents to 59ish. current values of the trades:

Mikes/Carters Buy 100shares and sell Jan2020 60 call at $1.10 for $5729, current value $5830 midpoint

MarkLexus alternative Buy 4 Jan2021 45 calls/sell 4 Jan2020 60 calls at $5428, current value $5600 midpoint

not much premium has decayed on the short calls since earnings are on 8Jan (that's why I rarely SELL premium weeks out that includes an earnings release) and 2weeks to go so both trades should appreciate as Jan opex gets closer. my thesis again was you are actually going to follow the dogs of the dow theory and hold the position all year not just for Jan opex. so let Jan short calls expire then resell Feb calls

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22Dec - mike khouw with a piece on Walgreens. this might be a first that the show recommends buying the stock first. going to suggest my go-to trade being a diagonal spread using deep in the money call. Carter Worth talked the dogs of the dow. so lets say you have $5800 ish in cash burning a hole in your pocket and you want to try the dogs of the dow method for 2020, instead of buying 100 shares and selling an upside call:

Buy 4 Jan21 45 calls for $14.67 (14.67 was midpoint as I typed) and Then
Sell 4 Jan2020 60 calls for $1.10 , assuming fills for $1357 per and $5428 total

keeping in mind earnings are before the Jan2020 opex. with this trade you are bringing in $440 in premium with breakeven at Jan opex at 61ish just like long stock/covered call but you also gain on the 4 long calls. can repeat the short sale process repeatedly.

given the following choices:

1- buy stock and sell Jan 60call
2- my buy 4 diagonal spreads
3- make no trade

I would chose number 3 and look to deploy that buying power elsewhere. I wouldn't look to enter a position on a stock that is in the red for the year with SPY being up so much. its in the red for a reason.

here is the video clip Walgreens clip

final update - Options Action $GS trade alternative

9Feb - again I don't follow GS so final update on this, im sure you get the drift of the previous notes. the takeaway from this if you followed Dan and Bonawyn is take some profits along the way, at least get your initial investment back since as of right now the stock is 238 and the spread is $5.55 at midpoint after hours. the decay is starting to work against you now. Ive been more successful recently by taking profits sooner for 25-50% winners vs looking for home runs. Good trade by Dan and B , my paper trade alternative as well. hope you rung the register as some point, take your lady to dinner, move on to the next one

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12Jan- if I followed GS I would have adjusted this paper trade on Friday opex so I will go with some after hours pricing so assume some slippage. stock at 242.11 :

Dan/Fresh Meat Bonawyn trade - Mar240/270 call spread - entry 4.60 debit, current value $9.20 midpoint . nice gain so far. if you followed and have multiple lots Id recommend you sell enough to make back your initial investment and let the rest go thru earnings.

Mark Lexus alternative - assuming I rolled the Jan10 240 perfectly at $2.11 (242.11 stock price - 240call) and rolled to the Jan 240 (Jan240 price at $5.20 - the 2.11) = $3.09 credit.. the new Jan240/Mar240 spread is valued at $4.90 +the 3.09 credit = $7.99

lets see how earnings shape up

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5Jan- update to this using after hour midpoint pricing with stock at 231:

Dan / Fresh Meat Bonawyn trade - Mar 240/270 call spread - entry $4.60 debit, current value $4.97 midpoint

Mark Lexus alternative - Buy Mar 240/Sell Jan10 240 - entry $4.32, current value $5.17 midpoint. going forward let the Jan 10 240 expire worthless this week and day prior to earnings sell the Jan240 call


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22Dec - have to say this trade had me giving it a hard pass right away. not exactly risk less make more. Dan Nathan and Fresh Meat Bonawyn Eison for the setup. Can someone get with Bonawyn and get him into the 21st century to get a twitter account. as I type the stock is at 228ish. the boys are recommending buying the Mar 240 call for $5.03 and sell the 270call for .43 for a $4.60debit.

first thing im not liking is selling that upside call for only .43. for 43 cents might as well just buy the 240 call outright, not mitigating the cost of the spread by much. I don't like laying out so much cash on a directional bet. Instead if you are going to buy that Mar240 call (assuming you are buying March to "give it time to work", make is a calendar spread. earnings are Jan15, you can sell the Jan10 240 call for about .55 credit... you are collecting more than that 270call right there. let that call expire and let the IV increase up until earnings and then sell the Jan 240 call (that's going for $1.45ish now).. the goal if you are determined to buy that 240 call to at least work down the cost basis.

Sell Jan 10 240 call at .53 credit
Buy Mar 240 call (priced at $4.85 now for debit) = $4.32 debit

Can repeat the short 240 sales after the Jan opex if you are going to hold the march call

here is the Options Action clip:

GS Trade  

$BA Options Action trade -update

27dec  - odd that of all the open trades that Options Action revisits this one after only a week, stock at 330ish now. see the original comments below. my quick thoughts on the comments are brought to you by Captain Obvious I think.. the thesis from below was to sell an upside call nearly two months in the future to generate some income and some protection with the uncertainties surrounding the stock. whole point of selling the call.. ie some insurance is to actually let it play out as in let it decay via time decay or just reduction in value if the stock drops so despite some more headlines the stock is actually UP 2 bucks since last weeks show and the short call up 50cents ish (mark to market loss). so unless the thesis changes (which it didn't on the show) there is no point in messing with this after just a week.
heres this weeks Options Action clip on Boeing Boeing clip . even my suggested alternate strike is up slightly. my consistent targets for selling premium is if I get a move after a 1-3 days where I show a 50ish percent of max profit I close it out since I have made the meat of the premium and then look to reenter something again on a rebound. many times can resell the same strike as the stock bounces around. sometimes doing nothing is the best thing when selling premium. like I said below youre not going to get much decay on mikes short call since its after earnings.





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22 Dec - quick segment on Options Action this week mentioning selling an upside call at Feb 345( going for $8.40, delta 35, IV 27, stock at 328 as I type)... here is the video clip

Options Action BA clip

I currently have an iron condor and also a diagonal spread on Boeing. my short call for the diagonal spread is the Jan10 340

Mike mentioned a client was short the Mar 350s but was recommending the Feb 345s instead. If I was long the stock I would not do either of those months. main reason is that earnings are on Jan29, so the Feb and Mar options are not going to get much decay until after. Plus IV tends to increase going into earnings so instead the last expiration prior to earnings is the Jan 24. so if you like the 345 level that short call is about $3.75 as I type. THEN sell the Feb short call right before earnings to get max premium

have 3 more weeks on my Jan10 340 short call and will be looking to sell something in the Jan24 expiration. will wait till right before earnings for the Jan31 expir to let that IV max out and get a juicier premium for my short call sale. also with earnings in 30days it keeps me from entering a new iron condor since the IV increase leading up to earnings will more than offset any time decay.

will see where the stock is after earnings. at some point Boeing/ FAA will clear the plans to fly. I expect some rumors to hit the markets prior to the official Phil Lebeau breaking news segment. if im able will try to sell upside calls on that rumor. the meat of the downside move for the halting of 737 production came during market hours with the rumors vs after hours and the official announcement. will assume the same happens for the upside.

purple in chart are my iron condor levels

Dan Nathans Options Action Trade alternative 1 nov

Been ages since ive posted but with more leisure time at work can get back at it....

on todays Options Action Dan Nathan layed out a Risk Reversal for Disney. here is the link to his video segment Nathan Disney trade . dan suggested you SELL the Jan 120 put for $1.20 and BUY the Jan 140 call for $2.20 for about $1 total debit.. the put premium offsetting some of the cost of the call. I don't follow Disney closely but did some put sales few months back. in general I prefer Call Spread risk reversals in order to have near zero cash outlay for the trade. so using Dans strikes and thesis I instead would do (after hours etrade prices):

Sell Jan 120 put for $1.12 credit
Buy the Jan 140/150 call spread for $1.55 debit
Total cost would be 47cents or so for the 3legs... at January expiration you have profits from 140-150ish and only risking .47 if stock is 120-140 at Jan opex

Mark to market dans setup profits right away if the stock moves up after earnings and loses if move down vs my call spread risk reversal that will show profits closer to opex.

my gut says to not enter this trade. dans thesis seems legit once the streaming service gets going but again my gut says to wait until that gap fills. would assume that if the earnings are poorly received and the stock breaks 128ish then 120 seems to be a foregone conclusion. if that happens the put premiums will be juiced and THEN could put on a call spread risk reversal. especially if the stock tanks in one big whoosh. I will keep on watch list for that event. the whoosh to low 120s brings the defenders onto CNBC with the but...but...the streaming service..the Mandalorian ...etc

the trade goes out a bit far out for my taste based on the next weeks earnings. not mentioned on air is you should have the buying power to buy the stock at 120 since you are selling a put. a pullback to fill that gap would get me looking to reenter somehow though.

If you are really determined to enter dans trade and agree with the thesis and strikes, consider also selling the Nov8 weekly 140call for about .40credit turning it into a calender spread as well for earnings. brings your cost basis down further. I don't wish bad things on stocks but a whoosh down would be a higher probability entry for my current trading style.