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April 18, 2013
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Earnings Strategy: GOOG 4.18.13 after the bell

Here’s the GOOG Earnings Strategy Alert that members received at 2:54pm EST today. Join the Earnings Alert family today!

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Our favorite earnings candidates today are GOOG & IBM. The rest of the names on the potential candidates list we shared in the SNDK exit details email have super wide bid/ask spreads or lack options volume. We decided to go with GOOG…we like the strategic choices better than IBM. Small position, live to fight another day if wrong.

As always, we are simply sharing what we are going to do. Follow at your own risk.
 
Earnings Trade Candidate: GOOG     

Easy to Borrow (ETB): yes

Liquid Options: strong OI & volume, wide bid/ask spread of 30-50 cents

Offers Weekly Options: n/a. Apr expiration is tomorrow

IV differential: approx 2.8x, 84% front month IV vs. approx 30% historical IV

Current Price: 766.40 

Expected Earnings Move: +/- 35.40 

Expected Move Range: 731.00 - 801.80 

Trade Strategy:

Copy the trade below and paste it into our recommended broker, thinkorswim (adjust number of contracts according to your capital risk preferences).

SELL -1 IRON CONDOR GOOG 100 APR 13 800/805/730/725 CALL/PUT @2.00 LMT

Iron Condor Legs (per spread):

Buy 1 GOOG Apr 725 Put (debit from account)

Sell 1 GOOG Apr 730 Put (credit to account)

Sell 1 GOOG Apr 800 Call (credit to account)

Buy 1 GOOG Apr 805 Call (debit from account)

Max Potential Gain: $200 per spread if GOOG expires expires between 730 & 800 

Max Potential Loss: $300 if GOOG expires below 725 or above 805 

Break Even: 728.00 lower b/e, 802.00 upper b/e

Explanation: GOOG has a very wide bid/ask spread which we tend to stay away from, but GOOG is one of the few we give a pass to given the massive options volume and open interest. It could be a huge swing, so we don’t want to sell a strangle. We need defined risk here to feel comfortable, and small size as usual since it’s an earnings based trade. With that in mind, we went with the Iron Condor which gets us 1x outside the expected move range (so it puts us right at both ends of the range) and provides a credit of 40% the width of the spread assuming a 2.00 credit fill. We usually look for a 30% credit on a 1x outside the expected move Iron Condor, so this pricing is favorable.

This Iron Condor gave us a little more wiggle room on the downside All in all, we like it enough to give it a shot.

Here’s a risk plot profile and 6-month chart showing the profits zone (green oval) of the GOOG Iron Condor:

 

 
NOTE: Trading Options into earnings includes financial risks and may result in loss of capital.  Do not consider an earnings based Options strategy unless you understand and accept the capital risks associated with the trade.

Tags: GOOG google earnings trade strategy options iron condor

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January 23, 2013
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GOOG 1.22.13 Earnings Trade Exit Details

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GOOG rallied strong off earnings. Even with the strong rally after the earnings report, we had a winner on our hands well into after hours yesterday. This morning GOOG extended higher, taking the stock above our Iron Condor’s upper break even.

We have two choices here: hold and hope GOOG pulls back into the profit range, or exit now and take a loss. Being this is an earnings trade and we exit the next day on 95% of our earnings positions, we decided it was time to exit after watching price action all morning.

We just covered the GOOG Jan4 740/745 Call Spread side of the Iron Condor @ 3.15. We intend to let the Put Spread side of the IC expire worthless given how far out of the money it is.

Assuming the Put Spread expires worthless (highly probable and optimal scenario), the loss on this trade will be 1.05 based on the 2.10 credit entry fill price. As always, we kept size small and fully intend to place another earnings trade today!

p.s. If you liked this trade, be sure to catch the rest of our Earnings Alerts as a TickerTank member. Sign up here!

Tags: GOOG google earnings report trade trading options iron condor bear call spread call spread bull put spread put spread credit spread

Photoset
January 22, 2013
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There are several worthy names trading today. Among them are GOOG, IBM, ISRG, CREE, TXN, & CSX. Initial analysis showed GOOG & CREE as the best candidates from an IV vs Hist IV perspective. We could not resist going with GOOG as we truly enjoy trading GOOG earnings. Here’s the trade…
 
Earnings Trade Candidate: GOOG   

Easy to Borrow (ETB): yes

Liquid Options: solid OI & volume, wide bid/ask spread of approx 20 cents

Offers Weekly Options: yes, Jan4

IV differential: approx 2.1x, 64% front month IV vs. approx 30% historical IV

Current Price: 704.15

Expected Earnings Move: +/- 34.50

Expected Move Range: 669.65 - 738.65

Trade Strategy:

Selling (to open) GOOG Jan4 665/670/740/745 Iron Condor @ 2.10 Day Limit (credit)

Iron Condor Legs (per spread):

Buy 1 GOOG Jan4 665 Put (debit from account)

Sell 1 GOOG Jan4 670 Put (credit to account)

Sell 1 GOOG Jan4 740 Call (credit to account)

Buy 1 GOOG Jan4 745 Call (debit from account)

Max Potential Gain: $210 per spread if GOOG expires expires between 670 & 740

Max Potential Loss: $290 if GOOG expires below 665 or above 745

Break Even: 667.90 lower b/e, 742.10 upper b/e

Explanation: When selling Iron Condor’s into earnings, we look for a credit equal to or greater than 30% the width of the spread on an IC that gets us at or slightly outside the expected move range.  In this case, we have the opportunity of getting a credit of 42% the width of the spread (2.10/5.00) on an IC that puts us slightly outside the expected move.

We could widen it a touch to get the credit down to 30% and increase our probability or success, but we decided to stick with this as we are satisfied with the range the 2.10 credit spread is giving us.

Click the images to view a risk plot profile of the Iron Condor as well as a chart of GOOG showing the profit range (green oval).
 
NOTE: Trading Options into earnings includes financial risks and may result in loss of capital.  Do not consider an earnings based Options strategy unless you understand and accept the capital risks associated with the trade.

p.s. You can become an Earnings Alerts member NOW and get access to the trades we identify as the best available this earnings season! 

Tags: goog google earnings trade strategy iron condor options trading credit spread

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January 22, 2013
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Google, Inc (GOOG) is set to release its earnings announcement after the close of the market today. We’re pretty excited to hear this earnings report, and we’ve got a hunch that it might be a lead-in to other tech giants releasing later this week. Right now GOOG is sitting on it’s 50-day simple moving average, right around $700. That’s a pretty good base for bulls… there’s certainly a lot of room to run upwards, but there’s also at least $20-$30 on the downside that could be filled in without breaking any important technical barriers.  The move predicted by implied volatility is around $35, which puts the upper end of the earnings range comfortably within GOOG’s recent range, and the lower end of the earnings range above a previous support line. It’s a toss-up, and we’re ready to see where the ball lands in a few hours.   

Google, Inc (GOOG) is set to release its earnings announcement after the close of the market today. We’re pretty excited to hear this earnings report, and we’ve got a hunch that it might be a lead-in to other tech giants releasing later this week. Right now GOOG is sitting on it’s 50-day simple moving average, right around $700.

That’s a pretty good base for bulls… there’s certainly a lot of room to run upwards, but there’s also at least $20-$30 on the downside that could be filled in without breaking any important technical barriers. 

The move predicted by implied volatility is around $35, which puts the upper end of the earnings range comfortably within GOOG’s recent range, and the lower end of the earnings range above a previous support line. It’s a toss-up, and we’re ready to see where the ball lands in a few hours.   

Tags: GOOG google earnings announcement support resistance range simple moving average

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December 20, 2012
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We were pretty plainly bullish in our November write-up of GOOG, and December is no different. We’re back above $700 now, with nothing between us and a price in the $750’s or higher by the end of the year. Low volume plus motivated bulls equals steep inclines in price, and it may be that those bulls are rewarded with an enormous end-of-the-year increase before reality sets in near the beginning of January. Our analysis is simple… if you’re in a bullish position, keep on keeping on, but keep an eye on rising implied volatility and market sentiment. Google can turn in a heartbeat, and you don’t want to get stuck on the bad side of a move. On the other hand, there’s a pretty strong case for continued bullish action. If you see the big earnings drop as an aberration, and recent good signs (like GOOG’s amazing new google maps app for the iOS, which we use daily) as having merit, then you can make the assumption that this is a just a slow trip back to the top. Either way, be sure to sign up for our Options Strategy Alerts, as we’re going to be watching GOOG closely, ready to pounce on the next entry opportunity we find! 

We were pretty plainly bullish in our November write-up of GOOG, and December is no different. We’re back above $700 now, with nothing between us and a price in the $750’s or higher by the end of the year. Low volume plus motivated bulls equals steep inclines in price, and it may be that those bulls are rewarded with an enormous end-of-the-year increase before reality sets in near the beginning of January.

Our analysis is simple… if you’re in a bullish position, keep on keeping on, but keep an eye on rising implied volatility and market sentiment. Google can turn in a heartbeat, and you don’t want to get stuck on the bad side of a move.

On the other hand, there’s a pretty strong case for continued bullish action. If you see the big earnings drop as an aberration, and recent good signs (like GOOG’s amazing new google maps app for the iOS, which we use daily) as having merit, then you can make the assumption that this is a just a slow trip back to the top.

Either way, be sure to sign up for our Options Strategy Alerts, as we’re going to be watching GOOG closely, ready to pounce on the next entry opportunity we find! 

Tags: GOOG google bullish 20 on 20

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November 20, 2012
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If you do a Google search for “Implied Volatility” it’s entirely possible that you may receive a couple thousand pictures of GOOG’s one-year chart. A 200+ point rise from 550 to 770 preceded a 140 point drop, all in a matter of about 4 months. Well, where there’s smoke there’s fire, and where there’s volatility there’s additional premium. We’re happy to talk about selling GOOG options, we just have to figure out which ones!  GOOG bounced pretty clearly off it’s 200-day simple moving average last week, and because of the strength of the resulting move we’re willing to accept $640 as a legitimate source of support (check out the red line on the chart above). Since that’s the case, we’re looking at any strategies that involve put selling around that strike price.  If you’re a Google bull and you’re just convinced it’s headed skyward, take your hand off your mouse for a second and think about spread strategies before buying a single long call. A little higher volatility means higher prices on the options, and there’s no reason to pay high prices for calls when you can cut down your cost (and increase your probable profit per trade) by picking up call spreads, or even a butterfly or two.  If you like the analysis, you’ll get plenty more by signing up for tickertank.com’s Options Strategy Alerts now! 

If you do a Google search for “Implied Volatility” it’s entirely possible that you may receive a couple thousand pictures of GOOG’s one-year chart. A 200+ point rise from 550 to 770 preceded a 140 point drop, all in a matter of about 4 months. Well, where there’s smoke there’s fire, and where there’s volatility there’s additional premium. We’re happy to talk about selling GOOG options, we just have to figure out which ones! 

GOOG bounced pretty clearly off it’s 200-day simple moving average last week, and because of the strength of the resulting move we’re willing to accept $640 as a legitimate source of support (check out the red line on the chart above). Since that’s the case, we’re looking at any strategies that involve put selling around that strike price. 

If you’re a Google bull and you’re just convinced it’s headed skyward, take your hand off your mouse for a second and think about spread strategies before buying a single long call. A little higher volatility means higher prices on the options, and there’s no reason to pay high prices for calls when you can cut down your cost (and increase your probable profit per trade) by picking up call spreads, or even a butterfly or two. 

If you like the analysis, you’ll get plenty more by signing up for tickertank.com’s Options Strategy Alerts now! 

Tags: goog google simple moving average 20 on 20 volatility

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October 18, 2012
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Top Two Earnings Trade Candidates 10.18.12 

Let’s start by reminding everyone that today is the Last Chance to get in our our Earnings Trade Alerts for the Special Offer pricing of $99/year. Offer expires tonight @ 11:59pm PST, no exceptions.

Now, back to the topic at hand…

We started the day with a top three earnings trade candidates list including GOOG, SNDK, and RVBD.  GOOG reported prematurely by mistake (for some reason “premature” and “mistake” seem to go hand in hand), so our list was narrowed down to two candidates.

With Oct expiration taking place tomorrow, the obvious choice for earnings plays is Oct options.  Reason being, when trading earnings we want as little duration as possible since it’s an overnight trade.

Let’s break down why SNDK & RVBD are top candidates…

SNDK has 50 cent strike increments which gives Trader’s added strategic flexibility. Volume & Open Interest on the options is good enough to get a reasonalby quick fill. The 7-10 cent bid ask spread could be tighter, but it’s doable. Implied Volatility (IV) on Oct options is 139%, which is 2.75x higher than the historical IV of approx 50% (2.75x IV differential).  That allows Trader’s to sell premium and get plenty of cushion by doing so.

RVBD options trade in 1.00 stock increments and also have enough OI & volume to get the job done. Bid ask spread is 5-10 cents, so pretty even playing field with SNDK there. The big difference is the 5x IV differential in RVBD. The Oct options are showing 275% IV vs approx 55% historical IV. That’s HUGE!

Both stocks have a tendency to move big on earnings, so a defined risk strategy is a must in our opinion. We chose RVBD as today’s earnings trade, but it wouldn’t be fair to Earnings Alerts members for us to share the trade here. Just wanted to give some insight into the thought process.

Tags: top earnings trade candidates earnings trade trading options implied volatility volatility differential vol Open Interest volume strike sndk rvbd goog

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September 11, 2012
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Our Founder, Nick Fenton, was invited to guest host on Market Matters yesterday. Market Matters is a weekly show done by the sharp cats over at riskalyze and financial bin.  Check out the conversation between Nick & riskalyze CEO Aaron Klein in the video above. Enjoy!

Tags: tickertank tickertank.com ticker tank nick fenton aaron klein riskalyze financialbin.com qe3 gm volt chevy volt aapl amzn goog tsla spy nke

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July 26, 2012
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AMZN, SBUX, and FB, oh my!

We have never post the trades we shared with paying Earnings Alerts members on the blog before the close, but we are making an exception today.  Why?  Two reasons; FB is reporting for the first time and we’re in a good mood from winning earnings trades in GOOG, BIDU, and LVS.  So without further ado, here you go!
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Today is one of those days you really have to keep an eye on slippage risk.  There are a lot of familiar names reporting, but most of them have wide bid/ask (b/a) spreads which translate to slippage.
Among the names we took notice to are AMZN, KLAC, AMGN, NTGR, MXIM, SBUX, CTCT, NEM, DECK, and FB. After taking a closer look at each of these, we narrowed down our top three to AMZN (160% IV, 10 cent b/a spread), SBUX (122% IV, 4 cent b/a spread), and FB (214% IV, 5 cent b/a spread). 
Of course all eyes are on FB as this is their first ever earnings report since the IPO.  The underlying risk of having no past earnings reports to reference has taken IV on the Jul4 weeklies to 214%…whoa.  Plenty of liquidity there with a 5 cent wide b/a spread, but a lot of risk on top of an already risky trading scenario (earnings based trading). 
Well, we decided that since we are taking a much needed vacation next week (will fill you in with more details shortly) we want to trade all three!  So here’s what we’re doing in very small size as usual…
Sell to open AMZN Jul4 195/200/235/240 Iron Condor @ 2.25 Limit (credit)
  • buy one Jul4 195 Put, sell one Jul4 200 Put, sell one Jul4 235 Call, buy one Jul4 240 Call
  • max gain $225 per spread if AMZN expires between 200 & 235
  • lower break even 197.75, upper break even 237.25
  • max loss $275 per spread below 195 or above 240
  • AMZN has a tendency to move big on earnings, but we like the range and the credit received with this Iron Condor. Need defined risk given the history of being a big mover and price of the stock, and this fits the bill very well while exploiting a 160% IV on options that expire tomorrow.
Buy to open SBUX Jul4/Aug12 50 Put Calendar @ 0.60 Limit (debit)
  • sell one Jul4 50 Put, buy one Aug12 50 Put
  • max gain $155 per spread if SBUX Jul4 Put expires worthless then SBUX pegs 50 on Aug12 expiration
  • lower break even 45.65, upper break even 54.95
  • max loss $60 per spread below approx 40 or above approx 60
  • SBUX has a tendency to peg strikes after earnings announcements.  The 50 strike is major psychological price level and a perfect peg level for a stock that does not tend to move violently after reporting.  This strategy provides a nice range, and optimally we will let the Jul4 50 Put expire worthless then sell the Aug1 weekly against the Aug12 long Put next week.  Definitely a dice roll here, but we like it given we always stay small in size on earnings trades and the capital at risk here is not massive.
Sell to open FB Jul4 25/26 Put Spread @ 0.33 Limit (credit)
  • buy one Jul4 25 Put, sell one Jul4 26 Put
  • max gain $33 per spread if FB expires at or above 26
  • break even 25.67
  • max loss $67 per spread at or below 25
  • We have no idea what to expect in FB earnings.  What we do know is 26 has been a level where buyers have stepped in.  We are taking advantage of the extremely high IV of 214% into earnings with this positive theta play based on the 26 support level. Keeping size very small and fingers crossed here. 
Best of luck to anyone that follows our lead or creates their own earnings based strategies!
“P.S. - Earn BIG with Earnings Alerts for only $99/year. This limited time Special Offer expires Thursday October 18th @ 11:59pm PST—NO EXCEPTIONS!!”

Tags: fb amzn sbux goog bidu lvs earnings trades options strategy facebook amazon starbucks google baidu las vegas sands

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January 19, 2012
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$GOOG Earnings, to trade or not to trade

The Options market has priced the expected earnings move in GOOG at 31.55.  Given current price of 636.95, this translates to an expected move range of 605.40 to 668.50. 

When we trade Options into an earnings event, our preference is to stay outside of the expected move range.  That means we would be interested in spread that have breakevens below 605.40 and/or above 668.50. 

Problem is, now that the volatility environment has cooled off there is not much opportunity to do an outside the range trade in GOOG.  Therefore, the only trade that makes sense to us is a directional one that is close to or around the money.  At these levels we are moderately bearish, but not bearish enough to warrant a close to or around the money trade. 

However, if we were bearish enough we would buy the Jan12 635/640 Put Spread @ 2.45 as a dice roll trade.  This tilts the probability of success slightly in your favor, but in the end it depends on a very uncertain outcome. 

Like we said, we prefer to stay outside of the expected move range.  Since there are no attractively priced spreads that accomplish that agenda in GOOG, we are staying away this time.  Good luck if you play it!

Tags: goog earnings google options expected move

Video
August 23, 2011
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$GOOG Day Trade Follow Up

Tags: goog google day trade support resistance consolidation short

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August 22, 2011
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$GOOG Day Trade Idea GOOG started today’s session with a nice bullish gap.  Since the open, GOOG has consolidated between 502 support and 506.50 resistance.  A few minutes ago, it broke through 502 support presenting a nice bearish consolidation breakout opportunity from an intraday perspective. To capitalize off this, one would short GOOG on a retracement back to 502 support turned resistance.  Upon entry, a logical stop placement would be 503.22 with a target at 495 (gap fill support).  It looks attractive here.

$GOOG Day Trade Idea

GOOG started today’s session with a nice bullish gap.  Since the open, GOOG has consolidated between 502 support and 506.50 resistance.  A few minutes ago, it broke through 502 support presenting a nice bearish consolidation breakout opportunity from an intraday perspective.

To capitalize off this, one would short GOOG on a retracement back to 502 support turned resistance.  Upon entry, a logical stop placement would be 503.22 with a target at 495 (gap fill support).  It looks attractive here.

Tags: google goog day trade stock market trading