Since we are on experiment…

Since we are on experiment discussion below again, here is one I have been paper trading. A twist on #pietrades. If we need a new term we could call them #lizardpies.

So obviously with the market rout all my #pietrades went ITM and to prevent a meltdown in margin I converted them all to #fuzzy. Which is great, has controlled the volatility and still have 111 weeks to manage them. But as @fuzzballl points out below, they are expensive. Cheaper than stock but my EXPE puts are now trading at 22.40 and 19.50. Not chump change.

The #pietrade idea is sound for income generation and even some capital gains long term as long as you sell the call ATM or OTM once assigned the stock. You also are typically only selling 1 side and as Karen the supertrader (now scam artist) figured out, selling the other side is what really improves long term returns and consistency. She may have been using some creative accounting but the idea is sound and has been proven by tasty trade.

So here is the tweak I have been playing with. When you set up the trade, start it as a #jadelizard but set it up ATM. For example with XBI currently at 78.02 I would sell the 10 DTE 78 puts naked (cash secure) and then sell the 78/79 call credit spread. Total credit 2.55. No upside risk, downside break even is 75.55 which is lower than where I probably would have just sold the put.

3 possible outcomes
a: below 78 assigned shares on the put at 78 but cost basis 75.55. Can sell a next week call or call credit spread if you think rebound, then uncapped upside
b: Between the strikes max profit and you may be assigned on the call but can exercise your long call if needed.
c: above 79 everything cancels out and you keep the credit minus $1.

Here’s a graph on a 10 lot.

2017-12-01-TOS_CHARTS

I have been trading it on paper and it would have had better loss control on the #pietrades than straight put sales the last 2 months.

Thoughts, holes in the strategy, other ideas to tweak it or make it better? If you wanted to be more conservative could sell strangles OTM instead or straddles ATM on the short sides but then less credit. Since my premise is income, I am trying to bring in as much credit as possible on the front end.

#coveredcallcampaign, #vixindicator

BABA earnings analysis

#Earnings $BABA reports tomorrow morning. Below are details on earnings 1-day moves over the last 12 quarters.

Aug. 23, 2018 BO -3.15%
May 4, 2018 BO 3.52%
Feb. 1, 2018 BO -5.90% Biggest DOWN
Nov. 2, 2017 BO -0.68%
Aug. 17, 2017 BO 2.77%
May 18, 2017 BO 0.45%
Jan. 24, 2017 BO 3.06%
Nov. 2, 2016 BO -2.60%
Aug. 11, 2016 BO 5.08% Biggest UP
May 5, 2016 BO 3.96%
Jan. 28, 2016 BO -3.76%
Oct. 27, 2015 BO 4.04%

Avg + or – 3.25%
Bias 0.57%, slight positive bias on earnings.

With stock at 143.00 the data suggests these ranges.
Based on current IV (expected move per TOS): 134.69 to 151.31
Based on AVERAGE move over last 12 quarters: 138.36 to 147.64
Based on MAXIMUM move over last 12 Q’s (5.9%): 134.56 to 151.44

Expected move is same as Maximum move, which is rare.

Open for requests on other symbols.

#jadelizard

STMP earnings

#Earnings #JadeLizard – Taking the upside risk off the lizard and still waiting on the put side. Covered calls on the put side at a 170 basis wouldn’t be the end of the world so watching it for now.

Bought to Close STMP NOV 2 2018 215.0/220.0 Bear Call Spread @ .10

Originally:

Sold 1 STMP NOV 2 2018 175.0/215.0/220.0 Jade Lizard @ 5.10

STMP earnings

#Earnings – Taking a shot with another #JadeLizard. No upside risk. Selling just outside the expected move on the downside and just inside the expected move on the upside. But….this thing could go anywhere. It’s had some crazy moves.

Sold 1 STMP NOV 2 2018 175.0/215.0/220.0 Jade Lizard @ 5.10

BIDU earnings

#Earnings – Selling a #JadeLizard based on Jeff’s data of average move on earnings. No upside risk and I’ll just manage the put on an implosion.

Sold 1 BIDU NOV 2 2018 167.5/190.0/192.5 Jade Lizard @ 3.55

#jadelizard DOCU tastyTrade idea sold…

#jadelizard DOCU

tastyTrade idea sold Dec. 21 35/49/50 for 1.58. Short 35 put, short 49 call, long 50 call

#jadelizard SFIX Tastytrade idea sold…

#jadelizard SFIX
Tastytrade idea sold Nov. 16, 26/32/34, (+26 put, -32 call, +34) call for 2.23.