#Earnings Bought to Close $AAPL Jan 29th 100/95 put spread for 4.10. Sold as part of iron butterfly on Tuesday for 3.85, plus calls closed for .13 on Wednesday, so loss was only .38 + commission. Decent recovery saved us .75 today!

I plan to do a webinar on the placement, management, and closing of iron butterflys… look for it later this quarter.

For those of you who followed on the AAPL butterfly this week, the trade didn’t work out. However, the good thing about these trades is the risk/reward, so losses are minimal. You brought in a 3.85 credit when you sold the butterfly, so whatever you pay today to close will count against that.

First, realize that you sold two credit spreads: a 100/105 call spread, and a 100/95 put spread. Assuming we stay below 100, the call spread will expire worthless and requires no action (regardless of whether you closed the short calls on Wednesday). The put spread MAY require action.

If AAPL closes the day at or above 95.00, you WILL be assigned stock at 100.00 if you do not act. This is because the long 95 puts will expire worthless, but your short 100 puts will expire in-the-money. To avoid this assignment, buy-to-close the 100 calls. You can try to get the cheapest price to close by waiting later in the day and/or for AAPL to move higher intraday.

If AAPL closes below 95.00, your whole put spread will expire ITM. You can do nothing if you wish, and your broker will execute the options and you will be debited $500 per spread (buy the stock at 100, then sell it at 95). My broker charges nothing for this execution, so I often let these expire. But if your broker charges for it, you may want to close manually during the day, as commission charges are probably cheaper. Put in the order to close the spread for 5.00. You might be able to get a lucky fill for 4.90 or something.

The goal today is to try to get out for less than 5.00. You can do this with a lucky fill on the spread, or legging out based on the intraday swings. If it’s a bullish day, waiting until right before the close might be beneficial as all extrinsic value will drain out, and hopefully the stock will be near high of the day.

Feel free to ask further, I am here until about 10:30 PT, 1:30 ET.
#Earnings

#Earnings I have now sold all of my $FB long 107 calls, leaving me short the 102 calls. If I am assigned short stock tomorrow, cost basis will be 105.00.

#Earnings Sold to Open $AMZN Jan 29th 710 calls for 1.20. Waiting for some pullback to sell 515 puts.

#Earnings Sold $FB Jan 29th 107 calls for 2.00 (from the condor). Half the position, giving me cost basis of 105.20 on short stock if assigned tomorrow.

#Earnings BTC $BABA Jan 29th 76 calls and 64 puts for .05 each. Condor sold yesterday for .88.

#Earnings Bought to close $CTXS Feb 19th 55 puts for .05. Sold yesterday for .55

#Earnings, here are the stocks to consider today…

I consider these the “rock stars,” symbols that have worked before and typically have juicy OTM options:
AMZN, EA

Also to look at, these have weeklys and high volume, but premium may be lower:
AAL, ABBV, AMGN, CVX, MA, MSFT, PSX, SWKS, WDC

#Earnings Sold to Open $CTXS Feb 19th 55 puts for .55. Partial fill on this order during post-Fed volatility. 21-day moves after last 12 earnings: Biggest UP move: 12.5%, Biggest DOWN move: -3.7%, Average move: 6.4%. This trade is 17.4% OTM.

#Earnings Sold to Open $FB Jan 29th 102/107 call spreads for .70. Completes iron condor started earlier.

#Earnings Sold to Open $NOW Feb 19th 60 puts for 1.00. One-day moves after last 12 earnings: Biggest UP move: 15.3%, Biggest DOWN move: -11.5%, Average move: 9.0%.

Since these don’t expire for 20 days, let’s look at the biggest 21-day moves after the last 12 earnings:
Biggest UP move: 16.5%, Biggest DOWN move: -10.7%, Average move: 9.6%.

So as you can see, the stock does not significantly increase its post earnings moves between 1 and 21 days after earnings.

This trade is 21.2% OTM.

I have traded this on most earnings and have closed the trade for .05 or .10 within the next couple of days every time.

#Earnings Sold to Open $BABA Jan 29th 59/64/76/81 iron condors for .88. Entered all at once. On last 12 earnings: Biggest UP move: 7.5% , Biggest DOWN move: -8.8% , Average move: 5.9% . These strikes are 9.6% (puts) and 7.3% (calls) OTM.

#Earnings Sold to Open $FB Jan 29th 89/84 put spreads for .50. Going for an iron condor; going for 102/107 call spread on next bounce.
FB moves on last 12 earnings: Biggest UP move: 29.6% , Biggest DOWN move: -6.1% , Average move: 6.3% . These strikes are 7.3% (puts) and 6.3% (calls) OTM. I’m giving the put side a bit more room. The 29.6% up move is an outlier from July 2013… the next highest is +14.1%, and then all other moves were less than 7%.

#Earnings Bought to close $AAPL Jan 29th 100 calls for .13. Clearing the way for remote chance of a rally back to 100 by week’s end. I am doubtful now, but closing these cheaply removes all upside risk. However, it also slightly increases your max loss.

#Earnings Sold to Open AAPL 95/100/105 iron butterfly for 3.85. Max profit 3.85, max loss 1.15. I may sell OTM options as well, but for now I am selling this while AAPL is pretty close to the center strike. These have worked before because although AAPL may move 5-10% tomorrow, it will often drift back to the mean by Friday expiration.

Trade details: Buy (1) 95 put, Sell (1) 100 put, Sell (1) 100 call,, Buy (1) 105 call. If you’re not sure about how to exit these, watch for my comments now through Friday, or ask any time.