As most of us on the East Coast are just getting back in the saddle so to speak, we wanted to take the opportunity to update our thoughts on some open trades that we haven’t discussed in a bit and how we are thinking about them in a week that could see light volumes but decent volatility.
OPEN TRADES UPDATED:
Trade: AMZN ($228) Bought Nov 2nd Weekly 210/200/190 Put Fly for .90
Dan: I took some of the profits from a Nov 230/210 Put Spread that I closed for a gain prior to earnings and rolled into this lower premium lower probability put fly that was specifically meant to isolate a post earnings move to $200. Well that ain’t happening and with 2 days of trading extracted from the already accelerated weekly expiration this one will need a massive move in a short period of time to break-even.
Trade: EBAY ($48.00) Bought the Jan 13 47 / Nov 45 put diagonal for $1.70
Enis: This is priced at about 1.95 at the moment and is setting up pretty well. The trade has a decent short delta at this point of about 26. With the stock in this range the Nov puts will continue to decay, once they are either gone or so little they are worth covering (depending on the stock) I will likely roll that short put out to create a spread in Jan with a nice set-up having taken advantage of the premium collection in Nov to finance a cheap put spread in Jan.
TRADE: WFM ($97.35) Bought the Nov 95/85/75 Put Butterfly for 1.85
Dan: This trade is a small winner so far, and with earnings expected on Nov 7th, I will keep a very close eye on this position, as the stock has been a decent mover over the last 4 qtrs (about 6.5%). This is one where I may chose to exit prior to the print if the stock is somewhere in between my strikes and look for a lower premium way to express this bearish view. This is not specifically an earnings trade, and I was primarily looking to focus on negative sentiment towards big market winners ytd.
Trade: Bought the YUM ($66.40) Nov 65/60 Put Spread for 1.25
Dan: There is nothing stock specific likely to come out btwn now and Nov expiration that is likely to catalyze a move lower, at this point the only way I see YUM below 65, and thus allowing to recoup some premium would be a broad market move lower.
TRADE: PCS ($12.66) Bought Nov 11/14 Risk Reversal for .05
Dan: This trade on a mark to market basis is a loser with the stock below my short Put strike. At this point there is nothing to do other than to make a call on the direction of the stock btwn now and Nov expiration. If I thought was going lower then I would cover the put, but I am not sure it has much more downside. At this point I am going to sit on my hands for a bit with the thought that the move lower in PCS since DT’s bid and Softbank’s announced deal for Sprint is a bit overdone. I will look to cover the put closer to $11, but my goal is not to be assigned stock on Nov expiration.
TRADE: XLY ($46.85) Bought Nov 46/44 Put Spread for .40
Dan: With XLY below my long strike, and the spread worth almost 50% of what I paid a few weeks back I am going to sit for a bit with the intention of closing half of it if and when I have a double.
TRADE: YHOO ($16.07) Bought the Jan13 17.50 calls for .39
Dan: Looking to spread these calls when the stock is above 17 (I paid .39, they are now worth about .42), if the stock just sits here these will start to just bleed. I may also look to roll to a longer dated call spread as this story likely has some legs. I suspect when new CEO Marisa Mayer gets back from her abbreviated maternity leave she is going to dive head first into her daunting task of righting YHOO’s listless ship. She will have plenty of levers to pull once they get the Alibaba cash, and I assume that some sort of analyst meeting in the Spring, possibly April/ May could serve as a huge catalyst for the stock. The unveiling of her way forward could be just the spark to break this pig out of a 3 year base.
TRADE: PAYX ($33.67) Bought the Dec 32 / 30 Put Spread for .35
Dan: This is a small winner so far, and with a little less than 2 months to Dec Expiration, the stock approaching 2 month lows, and the stock almost at my long strike, I am going to want to keep an eye on this one prior to the PAYX’s Dec 19th, days before Dec expiration. If and when I have a double on this trade I will take half off and let the other half ride.