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 March 9th to March 13th:
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Monday March 9th:
Name That Trade – I Call Your Name, Oh $YOKU
We took a look at yet another very oversold Chinese internet stock.
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Chart of the Day – $INTC: Gathering Intel
Short dated near the money put activity led us to believe that someone may know something they shouldn’t have, the possibility of a negative earnings pre-announcement.
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Tuesday March 10th:
NEW TRADE – IBB ($342) Bought the April 325/300 put spread for 3.70
The Biotech sector’s outperformance year to date appears to be tied somewhat to the m&a frenzy in the space. While often times it makes little sense to try to pick a top in one of the strongest sectors in the market, the recent reversal of fortunes in the prior leader, Utilities, Consumer staples etc… suggests that a sort of rolling topping process could be in place for some prior leaders.
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Action: MU ($27.75) Sold to close April 31/26 Put Spread at 2.85 for a 1.55 profit
With the stock down sharply in a relative short period of time, and our trade worth more than 2x what we paid we thought it was prudent to take profits from a near term oversold condition.
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$AAPL Probably Keeps One in the Chamber in Case You’re Pondering
With Apple’s Watch event over and the company holding their annual shareholders meeting we wanted to give a quick history of Apple’s announcements of capital return plans since 2012.
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Wednesday March 11th:
Action: XLF ($24) Sell to Close March 13th weekly 24/22.50 put spread at .15 for a .20 loss
With less than three days to the expiration of this trade, and one day prior to the 2nd part of the Fed’s stress tests for large banks we made the decision to cut our losses as the trade was becoming very binary, with the strongest likelihood a total loss.
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Action – Sold to close the KO ($40.25) March 42/40 Put Spread at 1.55 for a $1.05 profit
The stock’s quick decline to technical support at $40 made our trade worth 3x what we paid. We decided to take the quick profit as it is our belief in the very near term that consumer staples stocks like KO may be a tad oversold.
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Name That Trade – $ORCL
With a week to the company’s fiscal Q3 results we took a look at what the at the money straddle was pricing for the event and given the broader volatility in the equities walked away with the thought that the implied move may be fair to cheap.
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Name That Trade – $KRFT: Whiz With
Some out of the money call buying in June caught our eye given the fact the break-even of the large trade that we detailed is above the prior highs just made earlier in the year.
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Thursday March 12th:
Name That Trade – $NKE: Air Max?
Looking ahead to the company’s fiscal Q2 results this week we detailed two trades that we saw trade in the market, one bullish, one bearish.
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Name That Trade – Epic $WYNN
With the stock down 50% from the all time highs made a year ago, and every rally sold, it appears that sentiment could be not get too much worse At some point soon the stock could be setting up for a very sharp reversal off of a very oversold condition. We would likely consider risk reversals (selling put and buying call) to play for such an event if the stock was between $130 and $140 in the near future.
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Friday March 13th:
Considering Our Options – Don’t Be $CTRP ‘in
With the stock down a couple dollars since initiating the bearish trade we considered spreading. Will look to do prior to this week’s earnings report on Thursday, or possibly take the trade off for a gain prior.
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Name That Trade $ORCL: A 2×4 To The Head?
Some interesting activity in the stock on a quiet Friday caught our eye where a trader is playing for movement one way or the other in the next few weeks, but looking to spend as little premium as possible. This trade was definitely a bit unusual, and our breakdown is worth a read.
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TRADE: JPM ($60.55) Buy to April 60/55 Put Spread for 1.20
Two Words, Death Cross. The stock’s 50 day moving average is crossing below its 200 day moving average. While we do not trade off of inputs like this alone, we do use them to help inform our strategies and entries for trades. It is my belief that this coming Wednesday’s Fed statement could cause some volatility in U.S. equities, and our banks seem to incorporate too much good news at the moment.
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Watch discussion from Friday’s Options Action on CNBC:
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