Here is a quick recap of trades that we initiated, closed, or debated in the week that was May 26th to May 29th:
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Monday May 25th:
Markets Closed for Memorial Day Holiday.
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Tuesday May 26th:
New Trade – DE In Headlights
TRADE – Buy the DE ($94.10) June 95/91/87 put fly for 1.10
With a lot of good news in the stock, we wanted to fade the stock’s attempted breakout:
Rationale: Recent gaps in similar stocks have failed and consolidation has been common. This trade essentially targets a modest consolidation following the gap higher and does so with very little premium risk as the breakeven on the upside is close to where the stock is currently trading.
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Name That Trade – WDAY: Earnings Preview
We took a look at the trade set up into Q1 earnings and offered a couple ways to play depending upon your directional inclination, but concluded:
It would take a meaningful beat and raise for the stock to breakout in my opinion. But if they were able to put up such numbers, it is clear that there is little overhead resistance and the stock is off to the races.
On the flip-side an inline quarter with ok guidance and the stock is down 3-5%, while a miss and guide down and the stock is down 10%.
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Wednesday May 27th:
Name That Trade – PANW: Security Guard
We took a look at the trade set up into fiscal Q3 earnings and offered a couple ways to play depending upon your directional inclination.
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Name That Trade – COST Earnings Preview
We took a look at the trade set up into fiscal Q3 earnings and offered a couple ways to play depending upon your directional inclination.
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Thursday May 28th:
Action: GOOGL ($551.30) Buy to Close 1 May 29th 570 call for .10
Action: GOOGL ($551.30) Sell to Open 1 June 570 call at $3.10
New Position: Long GOOGL June / July 570 Call spread for $6
With a little more than a day to May 29th expiration where the short strike of this spread lies, we rolled the calendar out a month selling the June regular, further reducing our break-even.
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Name That Trade – MRVL: Considering Semi Targets
BRCM being taken out at 4x sales makes MRVL at 2x sales screen as fairly cheap, especially when you consider their balance sheet, which has 34% of their $7.3 billion market cap in cash and no debt, which could make it a fairly easy tuck in acquisition for larger players looking to gain market share in the growing Chinese LTE smartphone market
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Name That Trade – Give Up that $SPLK, Gotta Have That SPLK?
We took a look at the trade set up into Q1 earnings and offered a couple ways to play depending upon your directional inclination.
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Friday May 29th:
Trade: SPY ($211.20) Buy June 30th quarterly 210/200/190 Put Fly for 1.50
Rationale: With most of the S&P earnings out of the way, and the Fed the next real catalyst, with possible volatility emanating from Europe as Greece default is once again a concern, near term equity protection could make sense. But this trade risks less than 1% of the SPY, breaks-even down 1.3% and offers a very wide rang of profitability to the downside, with max profit down 5% in a month, with profitability to down 9.5%.
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Name That Trade: CAT Scratch Fever
Considering short entries in CAT, would much prefer to do so on a bounce back t0 $87, but targeting a break of $85 into Q2 results out in Aug expiration appear attractive given what seems to be no shortage of negative data points from peers in the industrial sector.
Discussed on Friday’s Options Action on CNBC:
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Name That Trade GM: Generally Unmotivated
Considering Stock replacement or long alternative.
Rationale: GM is trading essentially at the mid point of the 2015 range between $33 and $39, and frankly feels to be in no mans land. $35 appears to be important near term technical support, the level it was straddling prior to the m&a chatter, with options prices relatively cheap we prefer long at the money calls to long stock.
Discussed on Friday’s Options Action on CNBC:
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