Trading Diary April 6th – 10th

by Dan April 12, 2015 8:35 pm • Commentary

Here is a quick recap of all of the trades that we initiated, closed, managed, expired and considered (Name That Trades) in the week that was April 6th to April 10th:

Monday April 6th:

Name That Trade – I Didn’t Choose the $HLF, It Chose Me

With the stock becoming increasingly volatile, we thought it would be fun to explore two different ways how we would look to add leverage to a dug in long in the stock like Icahn, and a short like Ackman.

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Tuesday April 7th:

New Trade – $NKE With Wings?

TRADE – NKE ($100) Buy the May 100/105/110 call fly for 1.30

Over the last few weeks we have highlighted stocks, like NKE, which had broken out on strong results, filled in the gap lower, but looked poised to re-test the highs (ADBE – here, CRM- here, & KRFT – here). NKE could be setting up for a move back to $105 in the coming weeks if the S&P 500 is going to breakout to new highs.

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Wednesday April 8th:

Name That Trade – $QCOM: Stay Volatile San Diego

We broke down what looked to be a bullish risk reversal looking out to January, selling Jan 60 puts and using the proceeds to buy Jan 70 calls.

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New Trade – $T: Rethink Possible Yield

With the stock approaching 52 week lows, the dividend yield is nearly 6%, which creates quite a buffer to the downside over the coming months  We like the idea of looking for zero cost ways to add additional yield against long stock.

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Thursday April 9th:

Name That Trade – $COST: Wave Of Mutilation?

Hypothetical Trade: COST ($49) Buy May 29th weekly 147/137 Put Spread for about $2.40

The next identifiable event will be the company’s April comp sales in the first week of May and then the big one, fiscal Q3 results on May 27th.  The stock is generally not a huge mover on earnings as they report comps monthly, with a long term average move of only about 2%.

But the March data was poor, following weak Feb data, at some point in the near future we could see investors become a bit more sensitive to equity valuations in the face of weakening fundamentals.

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Name That Trade – $TSLA: Distance Equals Rate Times Time

Hypothetical Trade: TSLA ($209) Buy to Open May 8th weekly 205/180/155 Put Butterfly for $5

With two catalysts coming up (April 30th product announcement, and May 7th earnings) where much info about is known, we think both present the opportunity for disappointment given the stock’s recent bounce off of long term support at $180.  My ideal entry on the short side would be a few % points higher, closer to $215, but defined risk short biased trades targeting a move back to $180 in the coming weeks are starting to look attractive.

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Friday April 10th:

Name That Trade $XOM: Tiger in the Tank?

Considering long stock alternatives.

Hypothetical Trade: XOM ($85.50) Buy June 85 calls for about $2.50

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Name That Trade – $DIA In the Rough?

Potential Large Cap Multi-National Portfolio Protection:

DIA ($180.50) Buy May 180/170 Put Spread for about $2

The Dow 30, dominated by multi-nationals could be the most concentrated grouping of stocks exposed to dollar strength. The etf on the index looks like an interesting way to hedge long equity exposure to dollar strength resulting in weak Q2 guidance.

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Name That Trade $AXP: Options Market Expressing Little Concern

The implied move for next week’s earnings event is about 2.5%, which seems fair to recent history but could prove low given the stock’s year to date performance, down about 15% could prove low.

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