Trading Diary Sept 17th – 21st

by Dan September 23, 2012 7:37 pm • Commentary

Here is a quick recap of all of the trades that we initiated, closed or expired in the week that was Sept 17th to Sept 21st:  

Monday Sept 17th:

TRADE: FDX ($89) Bought the Oct 87.50/82.50 Put Spread for 1.05

Dan:  The company had already pre-announced a worse than expected Q3 in early Sept, and my feeling the the 2% implied move for earnings appeared to be very cheap as the main event would be Q4 guidance and the company’s analyst day in early Oct to further detail restructuring efforts in their Express division.   Puts looked cheap but the potential 5 to 1 payout for the Put Spread on a 8.5% move lower by Oct expiration appeared to be a very decent risk reward as Oct caught 2 events.  Read here


Tuesday Sept 18th:

No New Trades Tuesday, but if you missed Kristen’s QnA in the “Experts Corner” with VIX options trader Dominic Salvino read Part 1 here and Part 2 here.


Wednesday Sept 19th:

TRADE: JCP ($29.50) Bought the Oct / Nov 26 Put Calendar for .70

Dan:  The options market was pricing JCP’s Investor Day and New Store tour as if it were more important than an earnings event.  I am of the belief that JCP will have little success, especially in the near term of affecting meaningful earnings acceleration and market-share recapture by their current restructuring efforts, and their Q3 earnings results in early Nov could help the stock roundtrip the Aug/Sept rally back to the low 20s.  Read here

TRADE: BIDU ($112.50) Bought the Dec 135 / 145 / 155 call fly for $0.71

Enis:   It’s certainly concerning for BIDU how quickly QIHU is gaining share (1-2 percentage points in a few weeks is massive). However, the fundamentals for BIDU are much cheaper than comparable U.S. stocks  (like GOOG), though there is clearly a Chinese discount involved here as people are less trustworthy of the Chinese numbers. I’ve been going back and forth on potential trades on BIDU since I posted the Name That Trade last week. While I was initially interested in Oct / Dec calendars, I’ve gotten more nervous that little moves this stock until investors get reassurance from the earnings report on Oct 26th.

Until then, it feels like dead money, cheap enough to hold $100, but with enough competitive concern to stay below $120. A low delta, low decay trade might be ok to try here, such as the Dec 135 / 145 / 155 call fly for $0.70, which is a profitable trade throughout the majority of the upside range in BIDU over the past 2 years, gives you 3 months to expiry, and offers a cheap way to participate in a rebound in BIDU if the QIHU concerns subside.  Read here


Thursday Sept 20th:

Action: JCP ($26) Sold to Close the Oct / Nov 26 Put Calendar at .82 for a .12 gain.

Dan:  JCP’s new store format was well received as expected, but CEO Johnson’s commentary about the store within a store model vs their legacy model left many investors confused during the conference call.  On Wednesday the stock saw a massive 12% spike on perceived positive comments only to end the session and the hour long roller-coaster ride flat on the session.  By Thursday at noon, the stock was down 10% right at my strikes, and unfortunately the stock moved to far too fast.  I took the small gained and moved on, I will look to leg into Put Spreads on any rally backt o 30 prior to the company’s next earnings report in early Nov. Read here

Action: FDX sold to close 1/2 position Oct 87.50 / 82.50 Put Spread at 2.22 (stock ref 85.10) , for a gain of 1.17 on half my position.

Dan:  FDX Guided Q2 and the balance of the year about 10%, citing weak global demand for it’s premium Express services.  The stock sold off about 5.5% over the balance of the week, leaving the stock below the mid-point of the $5 wide vertical put spread that I own in Oct.  With more than a double since initiating the trade earlier in the week, I closed half of the position and I will now wait to hopefully realize the full width of the spread, but now it is imposible for me to lose on the trade.  Read here

Action: Buy AAPL Sept 700 call to close 2.00 (stock ref 695.50)

Dan:  With less than 2 days left to Sept expiration I needed to make a decision on what to do with the short leg of my AAPL Sept/Oct 700 Call Spread.  With the stock dipping below 700, I used the opportunity to cover the Sept 700 calls for 2.00, with an eye on a pop to spread the Oct 700 calls that I am long. Read here

Action: Sell to Open AAPL Oct 705 Calls at 15.50 (stock ref $698.40)

Dan:  After covering the Sept calls I wanted to lock in some gains on the Oct 700 calls and look to position for more gains with no added risk.  I decided on selling the Oct 705 call so that I have the potential to make another $5 in addition to the $3 that I already booked.  Getting my “MoJo”  back in trading AAPL well is going to take babysteps, just trying to hit singles.  Read here


Friday Sept 21st:

TRADE: GOOG ($734.50) Bought Oct 715/680/645 Put Butterfly for 5.00

Dan:  After my little foray with the Android based Samsung Galaxy 3s, I decided to go back to the iPhone with the new 5 release this past Friday.  One fo the few issues with the new iPhone that reviewers have taken issue with the device/new iOS is AAPL’s attempt at taking on GOOG with mobile maps, and AAPL subsequently kicking off GOOG’s map app that has been on every iPhone since 2007.  The issue for GOOG is that AAPL’s growing market share in smart-phones and their dominant share in tablets equates to a massive amount of search queries that GOOG used to have land in their lap through their map app. My sense is that this issue could start gather steam, as it did with FB and their supposed problems monetizing mobile search.  With the stock within 2% of the all time highs made in Nov 2007, the stock appears to be extended and I wanted to find a low premium structure with a good risk reward that would carry well into the company’s Q3 earnings event in mid Oct. Read here


Trades Expired Worthless in Sept:    

3:43 PM EDT – SEPTEMBER 13, 2012 BY DAN

TRADE: SDS ($13.30) Bought the Sept22nd (next week) 13.50 Calls for .16

2:51 PM EDT – AUGUST 24, 2012 BY DAN

TRADE: XLK ($30.55) Bought Sept 30/29 Put Spread for .20

2:20 PM EDT – AUGUST 23, 2012 BY DAN

TRADE: SBUX ($48.04) Bought Sept 47 Put for .90

11:22 AM EDT – AUGUST 8, 2012 BY ENIS

Trade: BAC ($7.72) Bought 1 of the Sept 8 call and 2 of the Sept 7 Puts for $0.47 total

10:25 AM EDT – AUGUST 17, 2012 BY ENIS

Action: Sold to close the 1 Sept 8 call at 0.31 for 0.08 gain, stay long 2 Sept 7 puts (now 0.08 cost base)

12:46 PM EDT – JULY 30, 2012 BY ENIS 

TRADE: FXI ($34.00) Bought the Sept 32 / 30 Put Spread for $0.33

 10:22 AM EDT – JULY 26, 2012 BY DAN

GS ($97.40)  Bought the Sept 90/80/70 Put Fly for .90

31st, 2012 May By Enis

BMO ($53.25) Bought September 50 Put for 1.85