Here’s the follow up we sent to Earnings Trade Alert subscribers this morning. Subscribe today and get in on the action!
We had one nice win, one fail, and one in the middle. Let’s roll though them.
AMZN stayed in the Iron Condor max profit range after reporting. Since the opening bell this morning, the stock has seen strong upside. This is likely a mix of short covering and genuine buying, but regardless the 235 strike is being threatened. The best action here is to cover the 235/240 Call Spread and let the put spread expire worthless. Current market on the Call Spread is 1.10, which translates to a gross profit of $115 per spread based on 2.25 fill. Excellent!
SBUX went lower as we anticipated, but the move was greater than expected. The Jul4/Aug12 50 Put Calendar can be sold for 0.45 here, which represents a gross loss of $15 per spread. Very minor and was worth the risk in our opinion given the circumstances we explained yesterday. Another option here is to roll the Jul4 Short 50 Put to the Aug1 Short 50 Put and continue holding the Aug12 Long 50 Put. This would be beneficial in the event there was a recovery to 50 in SBUX, but since this was an earnings trade and the damage is minimal we are simply bailing altogether.
FB is experiencing some pain today, down nearly 15% to 22.98. We simply bought back the Jul4 25/26 Put Spread @ 1.00 for a gross loss of $67 per spread. As noted yesterday, this was an even higher risk situation than the usual earnings trade, but we had to give it a shot. Good news is size was so small that this is but a blip on the radar.
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